Hawaii's real estate sales and lending community took interest yesterday in a drop in interest rates and the news that Fed Chairman Ben Bernanke had hinted about further cuts.

Bernanke said in a prepared speech yesterday that, “;The Federal Reserve will need to consider whether the current stance of policy remains appropriate.”;

If the Fed approves a rate cut on or before its next central bank meeting on Oct. 28-29, such a move could spur real estate activity in Hawaii's wobbly market, Hawaii real estate and mortgage industry professionals said. Still, given the current credit crunch and historically low consumer confidence rate, it's hard to gage how much influence a drop could have on the beleaguered market, they said.

Hawaii borrowers reacted yesterday when mortgage rates fell to 5.5 percent and will continue to react positively if they cycle lower, said Rusty Rasmussen, vice president for Castle & Cooke Mortgage.

“;We had some bad news and some good news yesterday,”; Rasmussen said. “;The stock market lost another several hundred points, but the good news is that interest rates went down.”;

Rasmussen said he expects a pick up in business as a result of favorable interest rates and the Building Industry Association's Parade of Homes this weekend.

“;It's gets people thinking about homes,”; he said. “;And, they'll want to take advantage of dropping interest rates because the difference in their loan payment could be huge.”;

Given the current economic woes, Rasmussen said that he would not be surprised if rates dropped to 5 percent in the next few months.

“;This is an historic time, it's never been this bad,”; he said.

Donald Lau, president of the Hawaii Mortgage Brokers Association, said Rasmussen's projection is not out of line. If drop of this magnitude were to occur it would do much to inspire consumer confidence, Lau said.

“;It would greatly alleviate consumer fears,”; he said. “;Rates are good now, but people aren't moving. Another drop would get them out circulating their money around.”;

  Lowered interest rates were a major catalyst during Hawaii's last real estate boom, said Harvey Shapiro, real estate economist for the Honolulu Board of Realtors.

Interest rates started declining in 2000 and bottomed out in 2003 at a 40-year-low, he said.

“;The Treasury index went down to 1 percent in 2003,”; Shapiro said. “;Cheap money was probably the driving factor for many people who bought real estate.”;

The market has been more volatile recently, he said. Last week the Treasury Index fell to 1.59 percent from 1.95 percent the week before, he said.

While a drop in the Treasury Index rate would help widen credit options to Hawaii homeowners and investors, not everyone will be able to get relief, said Stephany Sofos, a Honolulu-based real estate analyst and small business owner.

  “;There's a credit crunch and money is less available,”; Sofos said. “;I'm not sure that we'll see any discernible difference in the market.”;