National Association of Realtors Praises Federal Reserve Rate Cut as Good for Consumers

On Tuesday, the National Association of Realtors stated that The Federal Reserve's decision to ease its monetary policies will fortify a housing market that is already starting to rebound from its collapse, help restore consumer confidence in the real estate market, and possibly lend helping hands to borrowers with adjustable-rate mortgages (ARMs), one of the mortgage tools that is being cited as a cause behind many of the home loan default problems presently plaguing the nation.

"We believe that the Federal Reserve Board made the right move today in lowering the interest rate. Making borrowing more affordable will make money more available and this could go a long way in helping turn around the sluggish housing market. The housing market has been correcting itself and restoring affordability. With interest rates on many conventional loans still at near historic lows and today's rate cut possibly making loans even more affordable, we believe the housing market will begin to recover over the coming year," said Pat V. Combs, president of the National Association of Realtors and vice president of Coldwell Banker-AJS-Schmidt in Grand Rapids, Michigan.

On Tuesday, the Federal Reserve met and as was universally expected agreed to take action to lower interest rates in the U.S. by cutting the overnight lending rate that it charges to banks when it lends them money. However, the Federal Reserve chose to lower its rate by 50 basis points (0.5%), which was double the amount that some economists had been predicting.

The result was an enormous day for Wall Street, with the Dow Jones Industrial Average gaining 336 points and all three of the major market indices for U.S. markets rising by at least 2.5%, a tremendous gain for one day's trading.

Many large United States lenders began cutting their prime lending rates throughout the day in the wake of the news.