Interest Rates to Stay Low for “Extended Period”

The Federal Open Market Committee met today and decided to keep the Federal Funds Rate between 0% and 0.25%. Below is a quote from a very good analysis on Businessweek:

The FOMC stuck to its target range for the federal funds rate at 0% to 0.25%, and signaled that rates are likely to remain at exceptionally low levels “for an extended period.” This reference stopped short of giving a timeline of 18 to 24 months for the current policy, as anticipated by some market participants.

So, money will remain cheap for the immediate term. This doesn’t necessarily affect mortgage rates but the heavy government involvement in the mortgage market ensures that mortgage rates will continue to remain low as well.

30 Year Fixed Mortgage Rates Fall

The New Year has been good to mortgage interest rates so far. Rates are hovering at 5.00% these days. This is just the beginning because the Fed just started buying mortgage papers from Fannie, Freddie. Today the Feds bought $10.2 billion worth and they have a target of buying up to $500 billion by the middle of 2009.

Here is a chart showing how far rates have fallen since last September:

30 Year Mortgage Rates Fall, January 2009It may be a good time to refinance your loan, but be aware that you must have some equity in your home. We’re turning away a lot of people due to lack of equity. However, the exception is for those who qualify for a FHA streamline refinance, which doesn’t require an appraisal.

Senator Pleads Ignorance, Revealing Incompetence

There is a scandal brewing in Washington involving members of the Senate Banking Committee and Countrywide. Apparently these guys were getting “special deals” from Countrywide and are now pleading ignorance. I guess the trick is when you’re getting special treatment the best thing to do is not ask questions. I’ll have to keep that in mind if I should ever become a politician. 🙂

Denial. Ignorance. Incompetence. Fill your word here __________ after you watch the Chairman of the Senate Banking Committee revealing to reporters that  he doesn’t know the interest rates these days. Geez. Why are you then spearheading one of the most important mortgage banking reforms of the modern era? Twitter me Senator, I’d be happy to send you hourly updates on mortgage rates:

More on the brewing scandal.

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