Click on the title above to link to the article. Rates, as of this blog post, are lower than they have been in probably over a year. However, the Feds are talking about “forcing” rates down to stimulate borrowing. Do we think they will end up doing this? No. But it is worth keeping a watchful eye out for because you never know and want to be ready. We will certainly continue to monitor this potential development.
Know this, we do not believe if the Feds do it this will end any sort of housing crisis going on. The crisis is because people are in mortgages that they cannot refinance out of because the lending guidelines stiffened and changed so fast that they were left in the dust. Now those people are literally toast because they have a mortgage that is either adjusting now, or they simply cannot afford it, and they cannot refinance. They other issue is the values of homes in certain parts of the country have been hit so hard that these people are way upside down on their house. So, again, they could not refinance if they want.
This potential lowering of rates will help two people:
1. First time home buyers because money will be cheaper. They still have to qualify with stiffer guidelines, but cheap money none the less.
2. People who just want to lower their rate and payment who are not in any of the scenarios described above.
Bottom line is this…it will help stimulate the flow of money, which in turn will battle deflation, which is a big problem should it rear its ugly head. BUT, this will not have a lasting and/or significant effect on the housing crisis. It certainly will not hurt it, but it will not get us out of this mess.