U.S. Federal Reserve officials recently slashed official interest rates to an historic low range and signaled they will keep rates “exceptionally low” for some time amid rapidly waning price pressures.
Officials also signaled a new phase for policy in which lending programs financed by the Fed’s ballooning balance sheet, a process known as quantitative easing, replace the federal funds rate as the Fed’s primary policy tool.
The Federal Open Market Committee voted unanimously to reduce the target fed funds rate for interbank lending from 1% to a range of zero to 0.25%, the lowest since the Fed started publishing the funds target in 1990. The market-determined effective fed funds rate already has hit record lows in recent weeks.
Experts say the new, lower fed funds rate, in conjunction with plans to buy securities backed by mortgages, should keep mortgage rates low into the near future. It looks like Americans think it is a good time to consider a new mortgage for a new home — the Mortgage Bankers Association reported its application index rose 2.9% for the week ended December 12.
INTEREST RATES
30-Yr. Fixed: 5.19%
15-Yr. Fixed: 4.92%
5 Yr. ARM: 5.60%
1 Yr. ARM: 4.94%
Libor (3 months): 1.47%
Prime: 3.25%
(Source: Nation’s Building News Online, week of December 22, 2008)
For more information about mortgage rates from area lenders, you can search for a list of HBA member banks and mortgage lenders (including contact information) by visiting the SpringfieldHBA.com home page and clicking on the “Find-A-Pro” button. Go directly to the HBA home page by clicking here.