The Federal Reserve decided once again to cut interest rates Tuesday morning in hopes of stabilizing the nation's weakening economy. The federal funds rate was cut by three-quarters of a percent, bringing it down to 3.5 percent.
The decision to cut the federal fund rate was made during an emergency phone conference with Federal Reserve officials late Monday night. The plunging financial markets worldwide and fears of a potential recession are the main reasons for this cut. The federal funds rate affects consumer loans, including home equity, credit card and auto loans. The hope is that lower interest rates will increase the number of buyers that can afford to buy homes. Most buyers aren't as concerned with how much their home actually costs as they are with how big their monthly payments will be. Lower interest rates mean lower monthly debt obligations. This in turn could mean more buyers, which increases property demands and stabilize home prices.
The decision to cut the federal fund rate was made during an emergency phone conference with Federal Reserve officials late Monday night. The plunging financial markets worldwide and fears of a potential recession are the main reasons for this cut. The federal funds rate affects consumer loans, including home equity, credit card and auto loans. The hope is that lower interest rates will increase the number of buyers that can afford to buy homes. Most buyers aren't as concerned with how much their home actually costs as they are with how big their monthly payments will be. Lower interest rates mean lower monthly debt obligations. This in turn could mean more buyers, which increases property demands and stabilize home prices.
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