This is a time to pay off debt, not to gather more.

Сегодня Federal Reserve понизил interest rate на 0.75 %

Federal Reserve makes emergency 0.75% rate cut
By Michael M. Grynbaum and John Holusha
Published: January 22, 2008

The Federal Reserve, responding to an international stock sell-off and fears about a possible United States recession, cut its benchmark interest rate by three-quarters of a percentage point on Tuesday.

The Federal Open Market Committee lowered its target for the federal funds rate on overnight loans between banks to 3.5 percent, from 4.25 percent. The move was unusual both in its scale and its timing: In recent years, the Fed has only rarely acted between scheduled meetings of the committee, and almost always in increments of one-quarter or one-half point. It was the biggest single cut since October 1984.

In a statement, the Fed said: “The committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households.”

“Moreover,” the statement continued, “incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”

In a related action, the Fed approved a 75 basis-point decrease in the discount rate, to 4 percent.

Stock futures improved briefly after the Fed’s announcement but then fell back and indicated a sharp drop when markets open on Tuesday after a three-day weekend. The futures markets are also anticipating at least an additional quarter-point rate cut next week at the Fed’s regular meeting.

The Fed action was a stark indication that it is concerned about a possible recession. “Appreciable downside risks to growth remain,” the Fed said in its statement.

Treasury Secretary Henry Paulson, speaking to the United States Chamber of Commerce, said Tuesday that the administration and Congress needed to agree quickly on a program to stimulate the domestic economy as global markets plunge on fears the United States is heading into recession.

“Time is of the essence and the president stands ready to work on a bipartisan basis to enact economic growth legislation as soon as possible,” Paulson said.

He spoke as legislative leaders prepared to meet at the White House to discuss a stimulus bill.

Paulson said he was optimistic that the administration and legislators could find a bipartisan “common ground” on the economic package and “get this done before winter turns into spring.”

He also said he hoped to do something in the next couple of weeks “that will make a difference this year.”

The Treasury Department, he said, was focusing on the way home mortgages are originated and traded and said the department is developing a new regulatory framework for subprime and jumbo mortgages where he said markets were not functiоning well.

Вот тут два цента как она сама говорит аналитика по этому поводу…

Fed Cut: What It Means for Your Mortgage
by Diana Olick
Tuesday, January 22, 2008

On days like this, I think it’s important to go back to the ol’ mortgage primer and figure out exactly what all this news means to you, to your mortgage, to your home equity line and to your home’s financial future. I’ve said it before, and I’ll say it again: the 30-year fixed is not tied to short-term treasuries.

Fixed mortgage rates are tied to long-term bond yields that move based on the outlook for the economy and inflation. And guess what? The long-term outlook for the economy isn’t exactly rosy right now.

Today’s rate cut does affect short-term adjustable rate mortgages, but not really as much as you might think. Why? Because this rate cut was already priced into the market, maybe not three quarter’s point, but definitely a half-point. So if you are facing a reset on your ARM, you’re in much better shape today than you were just six months ago.

For example, if your rate adjusts Feb. 1st, and your ARM is pegged to the 1-year treasury, than your reset is going to be to 5.25 percent as opposed to the 7.5 percent that it would have been in August. That’s going to make the payment much more manageable.

So does this cut stem the foreclosure crisis? Maybe a bit on the margins, but not really, and here’s why: the bulk of the folks facing foreclosure because they can’t make their monthly payments have no equity in their homes and no money to put down on a refinance.

While rates might be lower, this is a market where lenders and investors are much more aware of risk and will gravitate toward borrowers that represent less risk. So many folks will still find themselves in trouble. For people who are having trouble paying the initial rate on the loan, forget it. No help there.

As for those looking to buy a home, that is, get a new mortgage, while ARM rates may be lower, the mortgage landscape is still a far far different tundra than it was just a year ago. You can’t do a stated income loan anymore, and you can’t do 100 percent financing. Tighter standards don’t change with a rate cut.

And I want to add my two cents here about a home equity line of credit. Yes, the rates are lower now, but I really don’t think that means we should all start using our homes as ATM’s again, which is what got us all in trouble in the first place. This is a time to pay off debt, not to gather more. The housing market is still in trouble.

The statement from the Federal Reserve this morning: “incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.” We all know the price correction in housing is still underway with home prices across the nation (yes, I know, some markets worse than others) expected to fall further, so this is no time to put your home in more hoc. Just my two cents, which I’m putting in the bank as we speak.

Снижение на краткосрочные бонды скажется на процентной ставке (30year fixed) через несколько месяцев, если ее ставку снова не подымут.
Уже сейчас rate 5.4% - результат снижения ставки осенью. Летом был больше 6%

Не только не подымают, а сегодня снизили ещё .
Это в течении 9 дней они понизили ставку уже второй раз.

Federal Reserve Reduces Federal Funds Rate by 1/2 Point to 3 Percent

WASHINGTON (AP) – The Federal Reserve on Wednesday cut a key interest rate for the second time in just over a week, reducing the federal funds rate by a half point. It signaled that further rate cuts were possible.

The Fed action pushed the funds rate to 3 percent. It followed a three-fourths of a percentage point cut on Jan. 22, a day after financial markets around the world had plummeted on fears that the U.S. economy was heading into a recession. That decrease had been the biggest one-day move in more than two decades.

The half-point cut Wednesday followed news that the economy had slowed significantly in the final three months of last year with the gross domestic product expanding at a barely discernible pace of 0.6 percent, less than half what had been expected. The report came amid increased concern from several quarters about a possible recession.

In a brief statement explaining their decision, Federal Reserve Chairman Ben Bernanke and his colleagues said that “financial markets remain under considerable stress.”

The Fed move was approved on a 9 to 1 vote. Richard Fisher, president of the Fed’s Dallas regional bank, dissented, preferring no change in rates.

The rate cut marked the fifth time that the Fed has cut the funds rate since it started with a half-point cut on Sept. 18 in response to the severe credit crisis which hit global markets in August.

Financial markets, which had been hoping for a bolder half-point move, rallied on the announcement. The Dow Jones industrial average, which had been in negative territory shortly before the Fed action, climbed back into the positive range in the minutes following the statement, with the Dow Jones industrial average up by more than 70 points in the first half-hour of trading.

Economists said the Fed decided to move a half-point rather than a quarter-point because it did not want an adverse reaction on Wall Street.

“At this tenuous time, they did not want to disappoint the markets,” said David Jones, chief economist at DMJ Advisors.

Jones said he expected at least one more rate cut, probably a quarter-point, at the next Fed meeting in March or at the April meeting.

The latest Fed action was quickly followed by cuts in banks’ prime lending rate, the benchmark rate for millions of consumer and business loans. Banks announced that they were cutting the prime rate from 6.5 percent down to 6 percent, the lowest level for the prime since the spring of 2005.

The Fed’s hope is that by making credit cheaper, it will encourage more borrowing, giving the economy a needed boost.

In its statement, the Fed said that “downside risks to growth remain” and pledged to “act in a timely manner as needed to address those risks.” That was seen as a pledge to cut rates further if the economy continues to weaken.

On inflation, the Fed officials said that they expected inflationary pressures to moderate in coming quarters but they also pledged to monitor price developments closely.

The GDP report showed that a key gauge of core inflation, which excludes energy and food, jumped at an annual rate of 2.7 percent in the final three months of last year, the fastest increase in a year and up sharply from a 2 percent increase in the July-September quarter.

The economy has been dealt a series of blows from a two-year slump in housing to a severe credit squeeze as banks faced with billions of dollars in losses from mortgage defaults have cut back on their lending and tightened standards.

The GDP report showed that the housing collapse had depressed economic growth last year by the largest amount in a quarter-century. Policymakers are worried that the slump could intensify this year as millions of subprime mortgages rest at higher rates.

To combat the threat of a recession in an election year, the Bush administration has been negotiating with congressional leaders for an economic stimulus package of around $150 billion, focused on tax rebates for households and business tax breaks to spur investment. The House passed its version of the proposal on Tuesday but Senate action could be delayed by efforts to expand the relief to senior citizens and the unemployed.

The Fed move Wednesday occurred at the first regularly scheduled meeting of 2008 for the Federal Open Market Committee, the group of Fed governors in Washington and regional Fed bank presidents who set interest rates.

The Fed’s three-quarter-point cut on Jan. 22 was taken after an emergency video conference held by Bernanke and other members of the FOMC.

That rate cut, the biggest reduction in the funds rate in more than two decades, was seen as an effort to boldly demonstrate that the central bank was prepared to do whatever necessary to keep the country from slipping into a recession – or at least make the downturn milder than it would have been otherwise.

Financial markets had complained that once the credit crisis hit in August, the Bernanke-led Fed had been too tentative in its responses until last week’s move.

Many private economists believe the central bank will keep cutting rates through the spring, especially if the unemployment rate keeps rising. The jobless rate jumped from 4.7 percent to 5 percent in December, the biggest one-month increase in five years.

Ну вот, надо готовиться. Через пару-тройку месяцев кредиты будут давать под маленький процент. Тем кто думает покупать недвижимость или перефинансировать - надо быть начеку.