Fed announces second cut in six weeks, lowering the Fed Funds rate to 4.5 percent.

In a move that was expected by many analysts, the Fed Funds rate was cut 0.25% today to reduce the Fed Funds rate to 4.5%.

In response to this cut, many commercial banks, including Bank of America and Wells Fargo, cut their rate for credit cards, home equity lines of credit (HELOCs) and other loans to 7.5%.

The theory is that the lower borrowing costs will induce consumers and businesses to boost spending, energizing economic growth. The Fed’s statement regarding the cut was, "The pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction".

The Feds reported, "The economy grew at a brisk 3.9 percent pace in the summer, the fastest in 1 1/2 years. The impressive performance came even as the housing market sank deeper into the doldrums."

This is GREAT news for Santa Clarita homebuyers, since the combination of lower interest rates and lower home prices means that they can get into more house for their money.

Looking for a home in the Santa Clarita area? Call or email Santa Clarita Realtor Linda Slocum, whether you’re looking at existing (resale) homes or new construction! You can reach her at 661.670.0349 or at Linda@SantaClaritaRealEstateBlog.com.

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