Federal rate cut
Earlier this week, the fed initiated another rate cut of 50 basis points to the federal funds rate, bringing it to a 5 year low of 1%. Remember, a drop in the federal funds rate means that it will be cheaper for banks to borrow money from other banks and the government. For you rate watchers, this rate cut has a stronger correlation with short term loans rather than long term loans such as 30 year fixed mortgages.

While dropping rates are usually good news for consumers, a drop in the fed rate cut is unlikely to guarantee any drops in traditional mortgage rates. Instead, consumers will most likely notice these rate cuts to affect the interest rates on short term loans such as car loans, credit cards, home equity lines of credit. In addition, the fed rate cut also impacts consumer cash such as the interest paid on savings accounts, money-market accounts, and certificate of deposits.

Bottom Line: The Federal Reserve issued this funds rate cut in hopes of stimulating our economy by making credit available at even lower rates.

Woman Chains Herself to Foreclosed Home In California
Down south, a struggling homeowner chained herself to her home after living there for 19 years.  Her story echos many of the problems homeowners have had with adjustable rate mortgages in California. During the housing boom, ARM mortgages were rampantly advertised as low rate & low payment monthly mortgage options; with many unaware of the possible consequences in the future. Unfortunately, this woman is facing foreclosure because of her adjustable rate mortgage and has responded with a desperate move to save her home.

Bottom Line: If you are having trouble with your mortgage, your best move is to speak with your lender as early as you can. In addition, there are helpful foreclosure avoidance resources on CalHFA , HopeNow, and even CMR.

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