Late yesterday (Tuesday) afternoon, the Federal Reserve slashed its target for the overnight federal funds rate to a range of 0 to 0.25 percent. That may sound like meaningless gobbledygook, but it’s not. It’s an all-time record low.

Okay, in theory the change only affects the rate at which banks lend money to each other. But in reality it’s pretty much certain to have an immeasurable knock-on effect on the wider economy.

Yes, we all know that mortgage lenders can often be frustratingly slow in passing on rate cuts to borrowers. But yesterday’s new figure is likely to put irresistible downward pressure on mortgage rates. And we might very reasonably expect to see the cost of home loans spiralling down sometime very soon.

All this just adds weight to the tip I gave on Monday. Real estate prices are low. Mortgage rates will soon be significantly lower. Now is the time to buy.

Tags: borrowers, borrowing, consumer news, economy, Federal Reserve, getting a mortgage, house prices, housing market, housing prices, interest, interest rate reset, interest rates, lender, lenders, lending institutions, mortgage lender, mortgage lenders, mortgage news, mortgage rates, mortgages, national home prices, rate cut, real estate, reduced rates, US economy

This entry was posted on Tuesday, December 16th, 2008 at 1:21 pm and is filed under Daily Pick. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.