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The Fed lowered interest rates by a half percent on Tuesday, giving homeowners with an adjustable interest rate loan a brief reprieve on mortgage costs.

Mortgages with an adjustable rate will immediately feel the effects of the rate change.  However, whether this action by the Fed will spur long term growth in the housing market remains in doubt.

The Chicago housing market is experiencing a downturn in neighborhoods throughout the city.  According to the most recent report from the Chicago Association of Realtors, the number of single family homes sold during the second quarter of this year dropped by 25 percent around the city.

The Fed cut may not help spur demand.  Banks and lenders are pulling back from riskier loans due to the increase in foreclosures across the nation.  The foreclosure rate for Chicago is twice the national average, according to RealtyTrac, Inc.

Until banks and lenders decide to loosen requirements for mortgages, demand for homes will continue to remain stagnant as many potential buyers are unable to qualify for a loan.

Inventory of Chicago Homes around the city is sitting on the market longer.  It now takes an average of 116 days to sell a home.

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