NO MORE INTEREST RATE CUTS THIS YEAR!

The December 11Th meeting of the Fed. is not likely to produce another interest rate cut as some would like. The reason is quite simple: the two most recent cuts have not brought a significant change in the the mortgage origination.

Interest rates are already low and further cuts will only make matters worse for the dollar. The Fed is not just concerned with domestic issues, it must weigh the impact that a weak dollar has on the overall economy and also how this affects the nation's global standing. We are a debtor nation and in order to continue to get foreigners to deposit their money with us, we must reward them with better returns and low interest rates just do the opposite.

Since it appears that we are not going to get another rate cut this year those who have been waiting for more cuts must decide now what is the best option available to them. The combination of falling home prices and low interest rates has created huge opportunities for buyers. Those deals are not going to last forever, savvy investors are already beginning to take advantage of the situation. Those who wait for the rates to fall may be left out because the Fed may decide that protecting the dollar is more critical to the whole economy than rescuing the real estate sector.

The sub prime business is a thing of the past, lenders are in the process of cleaning house. They have instituted tighter guidelines for new loans and this will create a more stable market. This in turn may lead to higher rates in the future and stop the price erosion and the disappearance of discounts that sellers are now forced to give in order to sell their properties.

There are not going to be any further rates cuts this year and may be none in early 2008. If you are in the market to buy a property, now is the time to make your move because the inventory is plentiful and the rates are low.
Write to John Palla at Jpallaa@gmail.com