Yesterday, December 16th, 2008: The Federal Open Market Committee voted to establish a target range for the Fed Funds Rate of 0% to 0.25% from 1%. American banks have responded by cutting their prime lending rate by 75 basis points! This translates to the lowest rate in history! Wall Street approved the move by closing the Dow Jones up 359 points…both the Nasdaq and Standard & Poor’s 500 index rose more than 5%. Many analysts believe the worst is behind us. Both Anthony Bolton and Warren Buffet predict we are entering a “Bull Market”.
However, the “price” of money doesn’t seem to be as important as the “availability” of money; it is yet to be seen whether this bold move will have an effect of the distressed housing market. Banks are hoping that if consumers are able to get equity lines of credit, this could help spark the economy. ~And since, there is little room to cut rates further, the Feds will have to look to other means of attracting home buyers into the market…It sure looks like everyone is committed to making home buying more affordable. Real estate is the backbone of this nation’s economy. Let’s hope these rate cuts spur lending! My thinking is that those “baby boomers” with strong equity in their primary homes up north that are looking to invest in a retirement home in Florida could just take that equity out at a very reduced interest rate and pay cash for an investment in the sunshine state and get quite a bargain at that! Just a thought…
Some interesting info: The cumulative average of The U.S. Prime Rate from 1947 to the present is 9.842%. The most frequent value from 1947 to today has been 7.5%. The median U.S. Prime Rate during these same years has been 8.75%. The all-time high was in December 1980-January 1981 at 21.50% (the year I got my real estate license). Today’s Rate of 3.25% marks a new low! The next meeting of the FOMC will be on January 28th, 2009. Maybe lower?
With today’s real estate prices and interest rates, there truly NEVER has been a better time to buy! Call us today. We look forward to earning your business! 239-370-0574