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« Arizona Homeowners: Bee-ware of Bee Hives! | Main | Federal Reserve Keeps Interest Rates Low... No Worries About Inflation »

Tuesday, August 05, 2008

Federal Reserve Leaves Interest Rates Alone

Earlier today, the Federal Reserve decided to keep its main interest rate the same.  The federal funds rate, which is the rate banks charge each other, will remain at 2.0%.  This was really no big surprise, as most economists expected the Fed to leave rates alone during today's meeting.  In fact, even despite fears of inflation, many believe the federal funds rate will remain unchanged for the remainder of the year.  Keep in mind that the federal funds rate does not immediately affect long term mortgage rates, but the Fed's decisions can affect consumer confidence in the real estate market right away.  Wall Street investors sure loved today's news, and the stock markets went crazy!

Although inflation is becoming a very real worry, the Fed obviously thinks the fear of economic slow down is greater.  I tend to agree (not that any economists care what I think!).  But the housing and mortgage markets really need to improve before the Fed starts raising interest rates again.  Higher rates could really hurt an already slow real estate market.

Visit Shannon Hubbard's Home Page     Written By: Shannon Hubbard

Great American Realty, Inc.

Cell: (480) 695-6672
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Posted by Shannon Hubbard, AZ Realtor & Computer Guru on August 5, 2008 | Permalink


Considering what's going on in the financial markets it's probably a good thing they left rates alone. Things seem pretty tenuious at the moment. America has weathered storms before but Congress needs to stop the free spending.

Posted by: arizona term life insurance | Sep 17, 2008 3:39:48 PM

- but so much has changed since this was posted! You guys need to update :)

Posted by: Raleigh Real Estate | Nov 20, 2008 12:39:43 PM

As interest rates rise, investors look for better returns than they can get from investing in "safe," liquid investments. To achieve the better return, which originally sold at a 7.5% cap rate, might then sell for a 10% cap rate. Assuming the same NOI and no increase in vacancy rate, this property would be worth $18 million, instead of the $24 million purchase price.

Posted by: blackfoot | Nov 20, 2008 2:27:04 PM

This is a great thing- Buyers need to have confidence in the banks-otherwise the housing market will continue to suffer. We all have to work together to overcome this economic crisis and be careful not to repeat past mistakes.

Posted by: Buyers Advantage Group Realty | Dec 4, 2008 1:02:23 PM

I can see the response to this post, I would be more interested if you update this post as per today's market, by the way I liked the way you put things across to readers!

Posted by: Active adult communities | Dec 17, 2008 2:19:24 AM

Interesting move by the Fed.

Sharon Hollas - Surrey Real Estate

Posted by: Sharon Hollas | Dec 22, 2008 1:41:00 PM

A good many of the homes sales in Bend Oregon are bank foreclosures and short sales. It looks like a good time to buy in your area.

Posted by: Jim Johnson CRS | Dec 24, 2008 7:36:37 AM

Housing and mortgage markets is really in boom.Street investors are mad to buy proprty.


Posted by: www.navyroof.com | Dec 27, 2008 2:48:55 AM

I am a Google Adwords Professional in Australia focusing on the Real Estate industry and just wanted to say what a great real estate blog you have.

Posted by: David Taylor | Jan 6, 2009 5:28:28 PM

Interesting move by the Fed.Housing and mortgage markets is really in boom.

Posted by: North Myrtle Beach Condos | Jan 7, 2009 12:32:52 AM

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