Fed Rate Cut Impact to Take Awhile

Detroit Free Press (10/09/08); Hagenbaugh, Barbara; Kirchhoff, Sue
The Federal Reserve on Oct. 8 forced interest rates down to their lowest level in more than four years in an effort to stimulate lending and consumer spending. However, reducing the target for short-term rates a half percentage point to 1.5 percent is unlikely to impact rates on fixed- or adjustable-rate mortgages, depending how their rates are set, according to Greg McBride, senior analyst at Bankrate.com. He says homeowners will see lower rates on home equity lines of credit, but lenders have begun to freeze or reduce their credit lines. Some analysts believe the Fed will cut rates to 1 percent by the end of the year.