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Just when you thought the Federal Reserve was done tinkering with the interest rates, they’ve gone and done it again: On December 11th, the Feds cut interest rates a third time.

Like last time, this rate cut lowered the short-term interest rate only a quarter of a percent.  However, since the first rate cut back in September lowered this rate a half-percent, the rate is now at 4.25 percent – exactly one percentage point lower than it was several months ago.

Also like last time (and the time before), the Feds cut the discount rate, which basically means that banks can borrow from the Federal Reserve at a lower interest rate.  After another quarter-point cut, the discount rate is currently 4.75, also exactly one percentage point lower than it started before the rate cuts this fall.

This may seem like a lot of mumbo-jumbo, but it is indeed good news for Colorado homebuyers.  Although experts doubted as to whether the initial half-percent cut would help consumers very much, there is no doubt that consumers will benefit from rates being a full percentage point lower.  With interest rates at 4.25, you can save a lot not only on monthly payments, but also on the amount you would have paid over the life of your mortgage.

The rate cut also benefits Colorado homeowners.  If you are interested in refinancing your home, perhaps to get a better rate or use the equity to make some home improvements, keep a close eye on the rates – but don’t wait too long, or they may go up again.

One other, and sometimes overlooked, way that the rate can benefit Colorado real estate owners: Some cities and neighborhood associations offer residents special loans for home improvements.  These loans may offer low or no closing costs, and are typically offered at a set rate that isn’t much higher than the rates set by the Federal Reserve.

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