The feds Primary Job is to monitor and control to some extend the economy as a whole. there job is not just to provide low interest rates to the housing market.
One of the ways the fed can stimulate the economy is by cutting their rates. By cutting their rates money is cheaper so banks can borrowand lend out. Not necessarily for home-loans but for business loans, etc. If there is more money available housing will enjoy something as well.
The side-effects of a rate cut is
- the potential loss of value to the dollar.
- Inflation
- and higher mortgage rates.
Benefits of the rate cut is primarily for
- Commercial banks that are in business of checking and savings type of banking.
- Home equity loans that are typically have a 10 year life.
- Auto Loans
- credit cards.
- Business loans
As I wrote above the benefits are intended for the economy in general and not necessarily to the housing market. The housing market can initially suffer by getting higher interest rates due to bonds being enemy #1 of inflation.
An example-of a recent fed move to benefit the Housing market exclusively was the Treasury Securities Lending Facility introduced for the first time last week.
