LendingTree Loans Chief Economist Comments on Today's Surprising Fed Cut

Rate Cut Incentive for Borrowers on the Fence

CHARLOTTE, N.C., Jan. 22 /PRNewswire/ -- Today the Federal Open Market
Committee (FOMC) cut both the fed funds rate and discount rate by 75 basis
points, or .75 percent.
LendingTree Loans Chief Economist Jim Svinth said "Today's Fed move was
necessary and quite frankly, overdue. It's what the market needed for
liquidity purposes and what borrowers needed to get off the fence and
refinance their ARMs into fixed rate loans. This should also be very helpful
for people who have held off purchasing a home as they waited for rates to
come down. For those folks, the landscape changed for the better today."
Today's action was the largest unscheduled interest rate cut in more than
20 years. The move lowered the target on a key short-term interest rate from
4.25 percent to 3.5 percent. The decision was made ahead of the Fed's regular
meeting, which is slated for the week of January 28. According to a statement
issued today by the Federal Open Market Committee, "The Committee took this
action in view of a weakening of the economic outlook and increasing downside
risks to growth."
What does the rate cut mean to borrowers?
The Federal Reserve decision lowered the cost of borrowing for businesses.
The federal funds rate, the rate that was lowered today, influences the prime
rate, which in turn can influence short term interest rates. Variable-rate
short term loans such as home equity lines of credit, adjustable rate
mortgages tied to the prime rate, auto loans and credit card interest rates
may all be affected by the rate cut. Fixed-rate loans, which are tied to long-
term interest rates like the 10-year Treasury note yield, are less likely to
be immediately affected by the Fed decision, but do tend to be indirectly
impacted by the Fed's action.
In summary, while the Fed does not directly control mortgage rates, it
does have an indirect impact on borrowing rates, particularly with shorter
term loans. With today's rate cut, look for credit card interest rates, auto
loans and even some home loans to dip slightly.
About LendingTree, LLC
LendingTree, LLC is the nation's number one online lending exchange,
providing a marketplace that connects consumers with multiple lenders that
compete for their business. Since inception, LendingTree has facilitated more
than 23 million loan requests and $185 billion in closed loan transactions.
LendingTree provides access to mortgages and refinance loans, home equity
loans/lines of credit, auto loans, personal loans, credit cards and high-yield
savings accounts via www.lendingtree.com and 800-555-TREE.
Launched in 1998 with headquarters in Charlotte, North Carolina,
LendingTree, LLC also owns and operates LendingTree Loans(sm), LendingTree
Settlement Services, LLC, GetSmart(R), and HomeLoanCenter.com. LendingTree,
LLC is an operating company of IAC (Nasdaq: IACI).
SOURCE LendingTree, LLC

Allison Vail of LendingTree, LLC, +1-704-943-8339,
allison.vail@lendingtree.com