Us economy ‘deteriorating’

The US Federal Reserve has cut interest rates by a dramatic three-quarters of a point…

In an 8-2 vote, Fed policymakers cut their target for short-term rates to 2.25%, the lowest in more than three years. The cut matched the most aggressive move since they began targeting the rate in 1990. The Fed has cut the rate from 5.25% since September.

A spokesperson for the Fed commented: “The outlook for economic activity has deteriorated further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress”

Mortgage misery continues

The cut came in the same week that the Mortgage Bankers Association US mortgage revealed that mortgage applications across the USA had fallen again. The MBA’s seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended March 7 fell 1.9 percent to 671.7.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.37 percent, up 0.39 percentage point from the previous week, the highest since the week ended October 12, 2007 when it hit 6.40 percent.

Fixed 15-year mortgage rates averaged 5.72 percent, up from 5.26 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 6.72 percent from 5.83 percent.

A spokesperson for the MBA commented: ”Consumers seeking to refinance their existing home loans tend to be highly sensitive to shifts in interest rates. The refinance share of applications decreased to 50.6 percent from 52.4 percent the previous week. The ARM share of activity decreased to 15.5 percent, down from 17.3 percent the previous week”.