Homeowners Find Some Relief in Fed Rate Cuts

Wednesday's national average rate for a 30-year fixed rate mortgage was 5.06%, which is the lowest level seen in the United States since the 1960s. It remains to be seen whether this will represent any real relief for the majority of Americans - or whether this trend will continue long enough to generate any momentum for the decimated housing market. But it is certainly good news for people who have managed to maintain excellent credit ratings throughout this difficult time.

Homeowners who purchased their homes using adjustable rate mortgages in the last few years now have an opportunity to lock into long-term fixed rate mortgages at rates that are at or below their original introductory rates. This should, to some degree, ease the pressures coming from rising foreclosure rates and personal bankruptcies. At least, from people who otherwise would have found themselves with mortgage payments that would have jumped considerably had mortgage rates continued to rise at the time of their adjustable rate's expiration.

New home buyers should also find the news encouraging, as they are now afforded the luxury of historically low mortgage rates - in addition to one of the strongest buyers' markets in the modern history of U.S. real estate. Qualified buyers in this market have every conceivable advantage, yet it remains to be seen whether that will be enough to overcome the innate fear that has paralyzed most American consumers. The mortgage rate news comes as President-elect Obama is making announcements of an $850 Billion economic stimulus package, centered around infrastructure upgrades around the country.