Yesterday, Fed has cut key interest rate to record low: zero to 0.25%.

One would think that there would be plenty of money for banks to issue new loans with low interest rates. That’s not exactly so, at least for now. As a Real Estate agent in Tucson, Arizona, I am talking weekly, if not daily to the lenders and mortgage consultants. Even though mortgage rates for conforming loans have moved significantly lower, it is now much harder for the Buyers to qualify for those loans. In addition to it, the rates didn’t move down as much as one would expect – the spread between Fed rates and mortgage rates is getting wider & wider. In other words, banks are keeping the difference, without passing the savings on to the Buyers. Same, if not worse applies to the non-conforming loans. For example, Jumbo mortgage rate is now almost 2% higher than it was at the end of 2005 – 8% vs. 6.375%, even though Federal Funds Target Rate moved down from 4.25% to almost 0%.

With this in mind, if you are planning to buy a house and HAVE the means to do so, do it wisely. It’s definitely a great time for bargaining the price and there are plenty of other things that can add value to your purchase.

If you need an advice on Buying or Selling home in Tucson, AZ, please visit http://www.FoothillsInsider.com. I specialize in the luxury residential real estate in the Catalina Foothills and North, NE, NW & E areas of Tucson.