Mortgage rates hit record lows – Federal Reserve contemplate actions

The mortgage rates continue to fall in the US. According to HSH.com’s broad-market mortgage tracker, the average rate for the 30-year fixed rate mortgage (FRM) loans suffered a declination of 3 basis points. The mortgage rate for the 30-year FRMs fell by 0.03 percent to finish at 3.86 percent. The fall in the rates have fuelled a rise in the mortgagecases with borrowers looking to take advantage of the low rates. Similarly, a decrease of 3 basis points was noted in the FRMI’s 15-year companion. This caused the FRMI’s 15-year companion to slide to 3.14 percent and hit a record low.

Relevance to homebuyers

The fall in the mortgage rates is of great relevance to the homebuyers. The low equity stake refinancers are also going to be affected by the drop. The 30-year mortgages backed by the Federal Housing Administration (FHA) have also suffered a drop in the interest rates to finish at 3.46 percent. Similarly, the average rate for the 5/1 Hybrid Adjustable Rate Mortgage (ARM) loans touched a low of 2.74 percent. This was a record low for the ARM loans as their interest rates dropped by 3 hundredths of a single percentage point.

Federal actions

According to Bernanke, Federal Reserve Chairman, the Fed is all ready to make adjustments in the policies in order to strengthen the overall economic growth as well as make improvements in the hiring patterns. It is still unclear what their actions will be and when they are likely to be seen. There are also lots of speculations regarding the benefits that the changes made by the Fed would bring.

The US economy has been in troubled waters for some time now. It remains to be seen if the all-time low long term interest and mortgage rates come up as solutions to the economic problems of this country. A majority of the borrowers believe in the accessibility of money instead of its price. Aside from that, the credit card rates, small business loan rates and the rates of the home equity loans and lines have remained quite unaffected by the Fed’s moves.

In a conundrum

It won’t be wrong to say that the whole situation is more or less like a conundrum. Growth is being reported in the economy as well as in the housing market. It would be better if the Fed remained content with doing nothing more than a few tweaks in the existing policies. A new program is totally unnecessary at this point of time. Well, the Federal Reserve has never attempted major shifts in the policies in the face of presidential elections. They can always keep the new programs in reserve to combat further downfalls in the US economy.