Homebuyers applaud new interest rate

The Federal Reserve slashed interest rates by half a percent Tuesday, in an attempt to jump-start a slowing economy. The new rate was lowered to 4.75%. It was good news for Wall Street, which roared to its biggest one day gain in four years. But it's great news for consumers who will be paying less to borrow money.

For the past several weeks, Justine Winnicki has been in the market to buy a home. The one thing getting in her way were the interest rates, until Tuesday. The Federal Reserve cut short-term interest rates by half a percent, hoping to ease the credit crunch many home-buyers like Justine are facing.

"It makes it more affordable for somebody in my position who couldn't afford a high a price of a house now to be able to possibly go up that high," said Justine Winnicki, a home-buyer.

Now with short-term interest rates sitting at 4.75%, home-buyers have more options.

"I had to keep my price lower, so now I'm able to bump it up a little more and have a larger market to play with," said Winnicki.

The rate cut is the first in more than four years. A win-win realtors say for not only the buyer, but the seller as well.

"It's going to open things up for current sellers who may have had their house on the market for several weeks and just and aren't finding the buyers who are able to afford it," said Ginny Hronek, a realtor.

So to break it down in dollars and cents, if you purchased a home for $200,000, you would save up to $40 a month under the new rate. It may not sound like much, but over time the savings can add up.

"That can make all the difference in the types of homes they're buying or what they will have to put down," said Hronek.

In the Greater Rochester area, realtors say the housing market is steady, but it tends to dip this time of year. They expect the interest rate cut will cause more "for sale" signs to pop up this week.