After a rally on Wall Street, pretty good news on the job front, and the announcement by the Bush administration that the HOPE NOW coalition of mortgage lenders will freeze interest rates for some homeowners with subprime adjustable-rate mortgages, it was a busy week for market and economic news.
Business Week Ending December 7, 2007 News from the Labor Department
After a “robust rally” over the last eight trading days that sent the Dow Jones up 876 points, the market took pause Friday in anticipation of the Federal Reserve’s upcoming meeting on Tuesday. As reported on Forbes.com, Paul Nolte, director of investments at Hindale Associates, described Friday’s market as paralyzed and indicated investors weren’t going to make any “bold moves” until after the Fed announces their decision on future cuts in the federal funds and discount rates.
The preliminary read on the University of Michigan’s consumer confidence index shows consumers are concerned with the price of gasoline and the credit crunch. The index dropped off slightly from 76.1 to 74.5.
Analysts and investors alike believe that Federal Reserve chair Ben Bernanke will announce a rate cut when the Open Market Committee meets Tuesday. The question is, which rates will it cut and how far?
Wall Street keeps its eye on the fed funds rate, the overnight bank lending rate which impacts how much interest consumers pay on credit cards, auto loans and home equity lines of credit.
The discount rate determines what banks will pay to borrow money directly from the Fed. The impact of the subprime mortgage crisis on both Wall Street and the banking industry has increased the focus on this rate as well.
Some analysts are suggesting the Fed will cut the discount rate by a half point and the fed funds rate by a quarter point. Investors are evenly split on whether the Fed will lower the fed funds rate by a quarter point to 4.25 percent or a half point down to 4 percent.
With fairly good job numbers in November and decent consumer holiday sales, the economy is still growing. The Fed may choose to take a less aggressive stance and opt for a modest rate cut this go around. The central bank meets again in January, March and April of 2008.
More next week…
If you're new here, you may want to subscribe to our RSS feed.If you would like to receive email updates to our blog, you may Subscribe to New Homes Real Estate Blog by Email Thanks for visiting!
The Author: Sandra Tuell Website: http://www.newhomes.com About: As weblog author for Homes Advisory, the blog for New Homes Realty, Inc., Sandra Tuell covers topics that run the real estate gamut, written expressly for the home buyer. On the blog, home buyers will find practical information and advice on preparing their existing homes for sale, enlisting the services of a buyer’s agent, searching for new homes, making an offer and closing the transaction. Sandra regularly presents real estate news from the perspective of how events will impact home buyers and the real estate industry in general. Trained as a journalist, Sandra stepped into the real estate industry as an accredited home staging specialist, interior arranger and color expert. Since March 2007, Sandra has researched, commented on and explored happenings in the real estate industry, including home building, home mortgages and financing, real estate investing, and the economy. With a passion for all that is pertinent to the design, comfort, livability and marketability of the home, Sandra also provides tips and insights for homeowners who wish to maximize the potential of their personal spaces and turn their new houses into homes. For the past four years, Sandra has operated her own interior arrangement and home staging company, Roomscapes, servicing clients in Pinellas County, Florida. Previously, Sandra worked in the corporate world as a marketing professional, applying her creative energy in a variety of roles including advertising, promotions, special events planning and web content creation. Her current position as a writer for New Homes Realty allows her to bring together her love of design and her educational training as a journalist. "It's really the best of both worlds," says Sandra.
This entry was posted by Sandra Tuell, on Friday, December 7th, 2007 at 5:56 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
No comments yet.
RSS feed for comments on this post. TrackBack URI
If you want to leave a feedback to this post or to some other user´s comment, simply fill out the form below.
Name (required)
E-mail (required)
URI
Your Comment
Subscribe to Homes Advisory
