What do interest rate cuts mean for the housing market and mortgage rates?

As the Philadelphia Inquirer (and virtually every other news outlet) reported today, the Federal Reserve slashed two key interest rates by three-quarters of a percentage point, marking the biggest cut in nearly 24 years.

So what impact might that have on the housing market and mortgage rates?

I think that the Federal Reserve’s interest rate cuts are really a sign for what will happen in the mortgage market and they are sending the message to consumers that now is a good time to buy real estate. I think we may see rates go as low as 5%, which is a result of the Federal Government realizing that they raised rates too quickly, and they are now trying to correct their mistake. If the Fed continues to cut mortgage rates, we will see: a new wave of refinancing, a stimulation in the home buying market (especially first time home buyers), and people with ARMs being able to pay their mortgages because rates will stay low enough. All of these things are economic stimulators that have not been around in the recent months. I have already noticed an increase in serious buyers since the rates started dropping.

Ultimately, I believe that the rate drops will help the spring real estate market and people who continue to sit tight and not make a move are going to regret that they did so 60 days from now.