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After an emergency meeting Monday night, the US Federal Reserve decided it was time to make another move to help improve the mortgage and credit crisis and potentially avoid a recession.
The $200 billion “mortgage bailout” is the boldest move that the Fed has taken since the Depression in 1930. The move is designed to free up equity for mortgage lenders so that they can offer more loans to those who are looking to refinance or purchase a new home.
In response to the news mortgage rates were cut by many mortgage lenders, by up to 0.375 percentage points, to make home ownership more affordable. Mortgage rates have been very volatile throughout the month and can take a turn, for the worse or better, depending on other financial data that will be released throughout the month.
The next big financial decision to be made is on March 18th when the Feds are expected to cut interest rates once again. Many speculators believe that the Fed will cut rates by 0.75 percentage points but could possibly cut rates by 1.00 percentage points. The rate cut will likely have a short lived drop in actual mortgage rates.
The Federal Reserve is acting very aggressively in their attempt to revive the US housing market and avoid an economic recession. If the market takes another turn for the worse you can expect the government to step in and do whatever is necessary to try and turn the table.