The Federal Open Market Committee voted unanimously to cut the fed fund target rate to a historic low of 0% to .25% from 1% earlier today.
In addition, the Fed also lowered its discount rate, the rate charged by the Federal Reserve for loans to commercial and investment banks, from 1.25% to .5%.
As noted here before, these rate cuts should lead to lower rates on home equity lines of credit (HELOCs) as well as other consumer debt.
Interest rates on 30 year fixed rate mortgage loans are now ranging around 5%, which is well below historical norms.
The monthly principal and interest payment on a 30 year loan of $240,000 at 5% would be about $1290. At 6%, the payment would be about $150 more, or $1440. Today's rates provide quite an increase in purchasing power.
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