Rate Cuts' Limited Real Life Impact: Other Fears Fuel Consumer Caution WARY CONSUMERS
B JB ar8Ûªt Hunt, a lawyer, Htll and her fiance, Kirk 9nH Nahra, another law-IV I yer, have been looking for a house in the Washington area for a year. During that period, the Federal Reserve has lowered interest rates five times.</br></br>None of those reductions, not even the one in the FedÛªs discount rate announced yesterday, has made it possible for the young couple to buy.</br></br>ÛÏWhat is stopping us from buying is not the mortgage rates, but the fact that prices have not declined,'' said Hunt ÛÏSometimes I think by the time we save enough for the down payment, rates are going to reverse and then we wonÛªt be able to afford the rates."</br></br>With interest rates at their lowest levels in nearly 20 years in some cases, the textbooks say the economy ought to be listening. Consumers should be in- creasing their purchases of cars and houses as lower rates reduce the cost; businesses should be investing more in new factories and equipment as borrowing gets cheaper.</br></br>Or, as President Bush put it yesterday, ÛÏI think when you look at historically low interest rates, a lot of people will suddenly wake up and say this is a good time to buy a home, a good time to buy a car."