The fed lowered interest rates. Not by the anticipated .25%, but by .5%. Not surprisingly the markets heralded its support with a resounding rebound. The celebration may be short lived however unless lenders find investors.

It may be a while before better rates trickle down mortgage pools and are available. Then borrowers still need to qualify for mortgages under more stringent lending standards. Properties will need to meet or exceed their previous value to be acceptable. Properties with subordinate mortgages may not qualify at all to meet reasonable loan to value in order to be refinanced. Even with prime lowered by one half percentage a fixed rate mortgage may still be out of reasonable payment range of a borrower with a previous teaser rate.

Rate reductions will have little to no effect on most of the mortgage holders. They refinanced to lower fixed rates several years ago and will continue to sit tight. The equity has long been stripped and most of the more recent mortgages will not qualify for refinancing. The home teller machine has been put on indefinite hold.

If the purpose is to offset the effect of inflation then the action is futile. If the fed doesn’t like the statistics, it excludes legitimate expenses for the people. When the consumer price index does not include the cost of food and fuel, then how meaningful can it be? As for job loss, it will take several years to erase the carnage of lost jobs in manufacturing, construction, and finance.