Stop Trading!: Time to Refinance!
Homeowners should rush to refinance their mortgages, Cramer said during Wednesday’s Stop Trading!, now that the Federal Reserve seems committed to low interest rates.
The Fed this afternoon announced that the key federal funds rate would remain unchanged in a range between 0% and 0.25%, and promised to keep that figure low for the foreseeable future. Cramer has been calling for 4% mortgages and refinancing for all homeowners and buyers, and he thinks today’s announcement allows for that.
“This is the real deal,” Cramer said, enthused about the move.
Cramer also pointed to the Fed’s Term Asset-Backed Securities Loan Facility program as another signal of the central bank’s commitment to solving the U.S. economic and financial crises. While hedge funds would need to be cautious of how refinancing could affect collaterized debt obligations, he still urged money managers to borrow against the TALF and buy asset-backed paper at discount prices. With the market on the verge of a turn, he expected that paper increased in value.
“Right now I have never seen a moment where the Federal Reserve is saying, ‘Here’s cheap money…Get back involved,” Cramer said.
The Fed’s apparent all-in attitude means the market can go higher, and Cramer thinks it will.
“We’re at a seminal moment in terms of the bear morphing to a bull,” he said. “This Federal Reserve will not be denied. In Ben Bernanke I trust.”
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