Monday, December 21, 2009

Feds Leave Rates At Record Lows

For sometime rates on home mortgage loans have been impacted by records lows. Many consumers and lenders wondered whether the feds would allow rates to rise during the holiday season. The Feds left short-term interest rates at record low levels. This leaves observers with a number of questions.

1. Does this mean the economy is making a turn for the better?
2. How will this stance impact home mortgage loans?
3. Will the stance help bolster the economy in 2010?

The Fed’s interest-rate committee voted unanimously yesterday to keep the key Fed funds rate unchanged in a zero- to 0.25-percent range. The central bank also said the U.S. economy is showing signs of life.

As a result, the Fed spoke of curtailing rate cuts and rate stays in the future and plans curtail moves that shower financial firms with the cash to make business and consumer loans. Termination of an initiative to pump $1.4 trillion into the home-loan market to drive U.S. mortgage rates down is said to occur by March 31.