The Federal reserve has lowered the fed funds rate down 1.25% over the past two weeks, how does this effect the housing market? Unfortunately, the housing market has been in such a downward spiral that there will be no quick fix. The fed is trying to avert a major U.S. recession brought on by the slow down in the real estate market. Cutting the Fed funds rate is a move designed to help banks ease up on credit guidelines and make more loans available for new investment. The idea of having more qualified buyers in the market will assist in helping to balance out the supply/demand challenges that the real estate industry has been faced with.. The Fed rate cut, has no direct impact on mortgage rates, but rates have dropped to five year lows over the past 30 days as many investors have fled the stock market and into more stable investments such as bonds. The rate cut will help to lower rates on items such as auto loans, home equity loans and credit cards and hopefully this carries over with more money being returned to the market. The Fed rate cut will probably take six months to see a true impact on the economy from a growth perspective and there are likely to be additional rate cuts in the upcoming months.

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