Fed Funds Rate Cut

The Federal Reserve surprised everyone Tuesday with an emergency intersession rate cut of .75%, the deepest cut in the Fed Funds Rate since 1984. The Fed Governors are acting in direct response to recent reports that the country is on the brink of recession.

For those that have credit cards, auto loans, or an Adjustable Rate Mortgage, the Fed's decision to cut this key interest rate .75% on Tues is great news. This is not necessarily a good thing for  long-term mortgage rates. We are currently at the lowest 30-year home loan rate since 2005.

When the Fed Funds Rate was cut in Oct to Dec of 01 by .75%, the rates rose .45% and when it was cut in May/Aug of 03 by .25%, the Home Loan Rates rose .78%. analysts are predicting another cut at the end of this month when the Federal Reserve meets.