Well, many economists are predicting that the Fed will cut consumer rates again at the end of this month. Wishful thinking? Maybe not. Inflation seems to be holding fairly steady and unemployment seems to be on the rise. The hope is that further rate cuts can also stimulate the badly faltering housing market. This is great news for home owners hoping to refinance or buyers looking for a great deal in the housing market……IF they can qualify. One factor having a drastic impact on the housing market is that many of the programs that used to exist to put people into homes are now gone. For many of those programs, that is good news. For others, valid programs that were good for consumers are gone. New and more flexible programs will not see a return, however, until the lenders no longer have to continue declaring large losses every week due to failed loans. I know the word “subprime” is considered a four letter word now but the truth is, it had it’s place. For people who had many credit difficulties, a 2 year loan was the perfect stepping stone into what would hopefully turn into a more conventional “A-paper” product. The problem is they became too easy to get and less than honest loan officers made it sound like the all purpose answer to any loan question. Hopefully the difficulties now will eventually bring sanity and balance and allow for a stepping stone instead of a way of life. In the mean time….a rate cut for the right borrowers can be a nice place to start!
Tags: fed, interest rates, rate cut, subprime