Big Fed Rate Cut: Buyers Rejoice!

Sep 19, 2007

The Federal Reserve slashed U.S. interest rates by a hefty half-percentage point. The decision by the central bank's policy-makers took the benchmark federal funds rate, which governs overnight loans between banks, down to 4.75 percent, the lowest rate since May of last year. The Federal Reserve also cut the discount rate it charges for direct loans to banks by a half-point to 5.25 percent. It was the first cut in the federal funds rate,the Federal Reserve's main tool to influence the economy, since June 2003 and the first half-point cut since November 2002. The stock market rebounded sharply on news of the rate cut. More importantly, qualified Manhattan homebuyers can now get a 30-year-fixed mortgage for around 6.25%, more than half a percentage lower than just a month ago.

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