Fed hopes bold cut eases global fears

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

Licensed toPrint Money?

Despite the mortgage meltdown, the blizzard of advertising for home loans continues.

With the subprime market in tatters in the wake of record defaults and foreclosures, fewer pitches scream "Bad credit? No problem!" Instead, lenders struggling to remain profitable are targeting people who have good credit and plenty of home equity.

With fewer homes being sold -- and, therefore, fewer loans taken out to finance purchases -- mortgage firms that have survived the subprime shakeout are focusing their marketing on persuading homeowners to refinance.

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