Last week’s half-percentage point cut in the federal funds rate isn’t a cure-all for the economy, said Jane J. Kim and Ruth Simon in The Wall Street Journal. Consumers, though, should get some relief. If you have a home equity line of credit, for example, lower rates could “show up as soon as the next monthly statement.” If your adjustable-rate mortgage is scheduled to reset soon, that rate increase also should be “less painful” than it would have been a couple of months ago, according to Bankrate.com senior financial analyst Greg McBride. But only, that is, if your ARM is tied to Treasury averages. If your loan is tied to the London interbank offered rate, or Libor—as many American mortgages are—the U.S. rate cut will help little.
Lower rates may make life less onerous for some homeowners, said Jerome Idaszak in Kiplinger’s Personal Finance. “But the Fed’s actions won’t solve all of the housing market’s problems.” The combination of an oversupply of houses for sale and tighter lending practices “will continue to sap the market, leading to further average declines in home values.” Homebuilders say demand for new houses remains in bad shape and could become even worse in the coming months. More rate cuts would help, “but market watchers say that this credit crunch is like a fever that needs to run its course.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
