Top economist says America could plunge into recession

The Federal Reserve cut short-term interest rates last week for the second time in eight days, lowering the benchmark federal funds rate to 3 percent.

While short-term rates aren't directly tied to mortgage rates, lenders look to the Fed for direction.

Houstonians looking to buy homes or refinance unfavorable mortgages could gain.

"People are going to take advantage of this," said Charlie Houssiere of Secure Mortgage Co. in Houston. "It's going to be a re-fi boom."

Rate cuts are meant to loosen up liquidity in the marketplace, helping stimulate the economy and making more capital available for loans.

Mortgage rates had already started to fall in anticipation of the rate cut. Conventional 30-year rates are now about 5.5 percent with good credit. read more