Federal Reserve Cuts Rate Half Point
As anticipated on September 18th, the Federal Reserve cut interest rates. To the delight of many the expected quarter point reduction was doubled with a half point reduction in the “Prime” rate.
This will give welcomed relief to many homeowners laboring to pay increasing monthly mortgages created by the sub-prime lending debacle. While the decrease in interest rates may not be enough to save all distressed homeowners the fact that the Fed was willing to intervene was more than enough to spark this year’s highest daily gain in the stock market of 335 points.
In an unrelated press conference today President Bush stated “these are unsettling times in the housing market”. President Bush reiterated that steps are being taken for the government to assist some homeowners refinance and again stated that the tax code was being revised to exclude any debt forgiveness by financial institutions in mortgage refinancing as income to the borrower.
The current tax code views this type of debt reduction as taxable income and would only add to the woes of distressed homeowners.
The President’s proposal of the tax code revision is a positive step for the housing industry and will help curtail the rising tidal wave of foreclosures.
~ Rhonda McMillan
Broker
