The Fed Rate Cuts

With all the hype about the Fed's recent rate cuts, what many consumers don't know is that this alone does not effect mortgage rates. The reason being is that the Fed rate is the rate at which banks borrow money, not the rate at which they loan money. And what the market needs right now is not another rate cut but a loosening of the mortgage restrictions so that more buyers can qualify to purchase a home. But not to worry, we have seen these same cycles in real estate repeat for over fifty years. Every time the market goes through a correction, banks panic and begin tightening up their lending criteria. But trust me, banks need to lend money to make money. It’s a gradual process, but eventually the banks will loosen up their purse strings again. We'd like to see folks with decent credit and a good job who may not have a sizable down payment, be able to get back in the game, and they will very soon. The recent legislation to expand the conforming loan limit amounts will certainly help entry level buyers in the more expensive areas like Orange County.

Once first time buyers can buy, move-up sellers can sell and the higher end market will loosen up as well. Stay the course, build your equity; and remember real estate is a long term investment!