The Federal Open Market Committee voted to cut the Fed Funds Rate by at least three-quarters percent today. The benchmark rate now rests in a range of 0.000-0.250 percent. In its press release, the FOMC identified three key economic sectors in which activity has weakened since October. The FOMC noted that: The U.S. job market is deteriorating Consumer spending levels are falling Business investment is contracting nationwide The Fed intends its rate cut to provide stimulate to each of these areas. In addition, the voting members of the FOMC singled out inflation as a diminishing threat to the economy. This is an important admission because it’s well-known that cuts to the Fed Funds Rate can spark inflation. Rapidly falling oil prices and commodity costs, therefore, likely paved the way for today’s historic cut. In its announcement to markets, the Fed gave The People what they wanted — a reassurance that the policy-making group would “employ all available tools” to help […]

It’s the age-old question for home buyers in need of a mortgage: Which is better: Fixed or ARM? Historically, the answer has hinged on a homebuyer’s desire to meet one of two mutually-exclusive mortgage financing goals: Get low mortgage payments for better cash flow Get long-term payment stability for better budget planning But because of government intervention and lingering questions about the economy, fixed-rate mortgages are now pricing cheaper than their adjustable-rate counterparts. Based on today’s mortgage market, therefore, home buyers can get both. Versus a comparable 5-year ARM, conforming fixed-mortgage rates are priced roughly 0.250 percent lower and have been over the past 23 days. The quarter-percent difference equates to $33 saved per month on a $200,000 home loan. Mortgage markets are ever-changing so rates we can’t know if this pricing anomaly will last. But, while it does, the decision to choose Fixed over ARM is a lot simpler.