Borrowing money just got a little cheaper today, emphasis on little. The markets and financial analysts were surprised to only get a 25 basis point cut in the federal funds rate. The reaction in the stock market sent the Dow Jones Industrial Average down over 220 points immediately after the announcement. A quick peek at a group of stocks’ 1 day charts showed a dramatic drop off at the Fed announcement.

While the Federal Reserve states that inflation is of concern, the markets appear to think the risk of recession is of greater concern right now. The housing market shows absolutely no sign of turning around in the foreseeable future and qualifying for a mortgage is now harder than ever as banks tighten their lending qualifications to protect themselves from additional sub-prime fallout. In my local area, home prices have always been lower than the national average and yet they are still managing to fall. A local Realtor had mentioned that homes in the area are on the market an average of at least 180 days before being sold or taken off the market.

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