Fed rate cut 'could boost US mortgages'

The US Federal Reserve has announced a cut in its main interest rate, a move which could make purchasing property in the country more affordable.

A reduction in the federal funds rate from one per cent to a target of between zero and 0.25 per cent has been implemented by the reserve, with the federal open market committee starting that the decision was necessary to due to low inflation and falling consumer spending.

"Weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time," the committee noted, a move which could boost the country's property market by making mortgages more readily available.

A recent report by the Royal Institution of Chartered Surveyors noted that there are signs of recovery in the US property market.

The publication cited recent government intervention and relaxing of lending criteria as contributing factors, noting that mortgage applications are on the increase.