Federal Reserve officials to push for a new stimulus campaign, which could
include a move that would push mortgage rates even lower.
The Fed will discuss such moves at its policy-making committee meeting next
Fed Chairman Ben S. Bernanke indicated to Congress last week that one of the
items under consideration would be to further drive down long-term interest
rates, which could pull mortgage rates down even more from their already-record
Some analysts have argued, however, that lower rates haven’t provided a broad
boost to the economy because many consumers still are unable to qualify for
loans due to banks constricting their lending standards.
Could 30-Year Rates Sink to 3%?
Mortgage interest rates have been on a record-breaking streak the last few
weeks, and some even predict the 30-year fixed-rate mortgage, which is the most
popular option for home buyers, could drop as low as 3 percent in the coming
weeks, according to CNBC news reports.
“If the 30-year fixed were to drop to 3 percent, that would open up yet
another wave of refis, perhaps more than the industry can handle,” mortgage
lender Craig Strent of Apex Home Loans in Rockville, Md., told CNBC. “Certainly
a 3 percent 30-year fixed would make home buying more affordable for some people
that may not qualify at 3.5 percent, but if people are not entering the market
at 3.5 percent, which is already insanely low, then they may not enter at 3
percent, as they may simply prefer to rent or may not have the down payment
needed to buy.”
Economy Still Lags
While the housing market has shown signs of picking up recently, the economy
continues to lag in its recovery, despite showing promising signs earlier this
year of growth. The unemployment rate, in particular, has been a troubling sign,
according to the Fed. The unemployment rate dropped to 8.1 percent, falling a
full percentage point between September and April and showing little progress
recently. The Fed has indicated in the past that it would take more steps to try
to boost the economy if the unemployment rate did not improve.
“We are very committed to ensuring, or at least doing all we can to ensure,
that we continue to make progress on unemployment,” Bernanke told Congress last