What the Federal Rate Cut Means for Homeowners

The Federal Reserve said it lowered short-term interest rates by half a percentage point, to 4.75%, to combat the effects of a weaker housing market and tighter credit on the broader economy.

Here is a look at what the Fed's action means for consumers:

• Homeowners. The rate cut is good news for borrowers with home-equity lines of credit, and savings could show up as soon as the next monthly statement. 
• Savers. Savers could soon see lower payouts on their savings accounts, certificates of deposit and money-market mutual funds.
• Credit Cards. Many credit-card customers should soon see some relief. About 85% of all credit cards carry variable rates.
• Auto Loans. A rate cut isn't likely to have a big impact on new-car loans in part because more than half of all auto loans are already offered at reduced rates due to heavy manufacturer incentives...
• Student Loans. Students with private, variable-rate student loans pegged to the prime rate may see their rates adjust more quickly than borrowers with loans tied to Libor.

To get a more in-depth look read the whole article here.

Pending Sales of Existing Homes Fell in July to Lowest Level Since September 2001

Pending sales of existing homes fell in July to the lowest
level in nearly six years as borrowers struggled to finalize
home purchases, particularly in expensive areas. The
National Association of Realtors said its seasonally
adjusted index of pending home sales for July fell 16.1
percent from a year ago and 12.2 percent from the prior
month.

Read the article here.

August Sales Slowest in over 5 years

There were only 4,293 homes sold in August which is lower than any other month this year.  In fact, it is the lowest number of homes sold in any month since January 2002.  This is an indication which direction the market is moving.  With September upon us we are now approaching the traditionally slower time of the year in terms of real estate sales.  Don’t expect the sales numbers to improve for 6 months.  The perceived issues with mortgages will only continue to hinder the sale of homes for the next 6 months or so.  Unfortunately, there are 5,924 homes on the market with 47% of them vacant.  These vacant homes are really hurting the market and will continue to be a drag on housing until that number decreases.  Buyers that have good credit or have extra cash will find the next 6 to 12 months to be a great time to buy.  The best time to get into any market is when that market is depressed.  I think we can safely say the housing market is in a bad way at the current time.  Buying in the right areas is more of a key than buying at the right time.  If you are planning to hold onto a property for the next 4 years or so, buying now or waiting to buy in 12 months will not make much of a difference as long as you are buying in the proper location.  Of course, make sure you use and agent you can trust.