Feds fund rate cut amounts to Milk & Cookies for everyone ….

OK, now just what is all this talk of Milk & Cookies ? Well I can’t say I coined the phrase, It was used first by a fellow Blogger Jeff Brown over at the Bloodhound Blog.

He makes a very good point. Before all the hoopla about the Fed Rate Cut, that we all knew was imminent, the Fed had propped up our economy by adding over $110Billion to the money supply. So if I want to continue with the Food analogy as Jeff did, I would have to say that was the Brownie ala-mode. In comparison to today’s announcement, it’s mere cookies and milk whereby most bankers feel the .5% Fed Funds rate cut was a very radical decision.

Our good friend Jesse Erickson over at Bank of America Mortgage says, “There was much speculation on whether the Fed would cut and by how much (most predicted a .25% cut). They also cut the Discount rate— another radical move by the Federal Reserve. This is the first time the Fed has cut the Fed Fund rate since 2003.

This is a HUGE move by the Federal Reserve. The Prime Rate is now at 7.75% (yes, all of your HELOCS just went down!) Keep in mind that when the Fed reduces rates— we are not talking about Mortgage Rates directly— in this case; however, expect extreme market volatility in the coming days for mortgage rates.”

By the way a HELOC is; Home Equity Line of Credit.

So what does this mean for us here in Florida ? Good question, I would bet that the NAR’s recent projection of the 30 YR Fixed rate holding at 6.4 till the end of the year will have to be changed, it might hold solid for a week or two but it will go down before the end of the year. This also kind of blows the air out of the Interest Rate Reset projections. Oh there will still be some here, but not to the extent predicted on the National scale. Of course according to RealtyTrac’s monthly report Florida just moved into the number 2 spot in August for total Foreclosures, up from number 3 spot in July. Yep we beat the July totals; August leaped 77% above the July numbers. If you look into the root cause of most if what has transpired in the Florida market it’s due in large part to Real Estate Investors who are now having to ante up on property they thought they could flip while the market was hot.

Our next Blog will take a look into what the future holds for the Tampa Bay Housing Markets, as we detail some of our research with local home builders and suggest some ways for Sellers and Buyers to cope with the sluggish market. So stay tuned and be sure to book mark us, or click on the RSS feed - yeah the Orange looking Chick-let thingy at the top right hand side of the page.

Related Posts:

NAR Home Sale Projections - Glass Half Empty or Half Full for Florida ?

Mortgage Mayhem - home prices drop like ROCKS !

How not to become a Florida Foreclosure Statistic

The Silver Lining in the continuing saga of mortgage lending woes