Fed Cuts Rate By Half Point!
Concerned about a once in a decade economic crisis, the
Federal Reservecut its
federal funds rate by half a percent to 1%, its lowest level
since the period of June 2003 to June 2004, a time when the country was
battling the risk of deflation. With gas prices much lower than
before, the Fed is less concerned about inflation and more concerned about
the overall economic outlook for the country.
Lower rates free up cash to allow consumers to buy, and lower
short
term rates may stimulate commercial loan activity which often is tied to
short term rates. "The pace of economic activity appears to have slowed
markedly, owing importantly to a decline in consumer expenditures,"
the
Federal Open Market Committee said in its statement after voting
unanimously to approve the rate reduction. The prime rate, the rate that
banks charge its best customers, will now become 4%.
Applications for home loans are on the rise. The Mortgage Bankers
Association mortgage application index showed that mortgage applications
jumped from an eight year low last week. The index jumped 16.8% to 476.7
in the week ending
October 24, which is up from the prior week's 16.6%
decline. The group's purchase index was up 8.5% to 303.1 while its
refinancing index was up 28.5% to 1,489.4.
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http://www.NorthFloridaHomeSearch.com