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Fed takes steps to lower rates

November 5, 2010 - Families that are planning relocations may be able to benefit from an extended climate of housing affordability, as the Federal Reserve has announced steps that would keep mortgage rates low into the near future.

In a process called quantitative easing, the Fed plans to purchase $600 billion in government securities over the next eight months, a strategy that the agency hopes will combat the nation's low unemployment rate and slow economic recovery. The move affects Americans in a number of ways, but relocating families could benefit from lower mortgage rates that would make purchasing a home with a mortgage even more affordable.

On the other hand, recent comments from the Mortgage Bankers Association could indicate that rates might not fall as much as expected. The MBA's chief economist, Jay Brinkmann, said recently that the Fed's actions had already been anticipated by mortgage lenders and were already factored into the record-low mortgage rates found today. The trade group predicted that rates would actually increase to 5.1 percent by the end of next year.

For the moment, families that are moving into a new home with a mortgage can still find low rates. The most recent report from Freddie Mac said that the average interest rate on a 30-year fixed-rate mortgage was 4.24 percent last week.
 

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