The Federal Reserve's lasted cut in interest rates is welcome news for homebuyers and anyone looking to refinance their mortgage.
"As recently as last summer, rates on 30-year fixed loans were about 6.5 percent, and once the Fed actually settles out at the end of the week, we’ll probably only be in the low fives, which will be a two to three year low," according to Spencer Rascoff, chief financial officer of Zillow.
After the Fed lowered its benchmark rate to 3% from 3.5%, mortgage rates will adjust almost immediately. But Rascoff says it might take some time before we see a pickup in the housing market.
"Buyers really hibernate in the winter, and they won’t come out of their shell until the spring, but when they do, they’ll find it to be a buyer’s market."
Vince Farrell, managing director of Scotsman Capital, says the mortgage industry should learn from the past and be more responsible when financing and refinancing mortgages
"I think that with 30-year fixed mortgage where it is right now, 50% of all conventional mortgages are resetable or refinanceable, and I think that’s a big deal.
"Now, I think the discipline would be, don’t loan these people 100%, in order to repeat what went on, but if you can refinance at a lower rate, just get that lower interest payment, the whole economy benefits."