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WASHINGTON — The Federal Reserve signaled Wednesday that a full economic recovery could take nearly three more years, and it went further than ever to assure consumers and businesses that they will be able to borrow cheaply well into the future.
The central bank said it would probably not increase its benchmark interest rate until late 2014 at the earliest — a year and a half later than it had previously said.
The new timetable showed the Fed is concerned that the recovery remains stubbornly slow. But it also thinks inflation will stay tame enough for rates to remain at record lows without igniting price increases.
Chairman Ben Bernanke cautioned that late 2014 is merely its “best guess.” The Fed can shift that plan if the economic picture changes. But he cast doubt on whether that would be necessary.
“Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” he said.
The Fed has kept its key rate at a record low near zero for about three years. Its new time frame suggests the rate will stay there for roughly an additional three years.
The bank’s tepid outlook also suggests it’s prepared to do more to help the economy. One possibility is a third bond-buying program that would seek to further drive down rates on mortgages and other loans to embolden consumers and businesses to borrow and spend more.
Information obtained from the Calif. Asso. of Realtors with permission.
Article printed in the Mercury News and A.P. Jan. 25, 2012.
I just got the news. Interest rate for a 30 year fixed: 4.5% for loans up to $417,000.
For loans up to $729,000 the rate is: 4.75%
These are great rates, and they won’t last forever. It’s time to upgrade yourself. So contact me today about buying a new home.
The Federal Reserve announced it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time. “Information … suggests that economic activity continues to strengthen and that the labor market is stabilizing,” the Fed said in a prepared statement.
“Household spending is expanding at a moderate rate, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly,” the Fed said. “However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls.
“While bank lending continues to shrink, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels” the Fed said.
The Fed also said it would end its program of purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help keep home loan rates low. That program will conclude at the end of this month when the Fed’s mortgage bond holdings reach the $1.25-trillion limit it set last year.
Maintaining a good credit score can help you in a number of financial situations. For example, most lenders use your FICO score to judge credit worthiness. FICO stands for Fair Isaac Corp. which analyzes credit information to come up with a score.
A good score can mean a lot when it comes to your interest rate for car loans and home loans.
One key to keeping a good credit score is a combination of continuing to use your credit responsibly and paying down balances as soon as you can. I think it’s better to pay your credit cards off each month to avoid paying the high interest. So don’t buy more than you can afford to pay off.
To make sure you don’t have any credit errors, check your own credit at least once a year. You can get a free report from each of the three credit reporting agencies.
For a free copy of your credit report from all three agencies, you can visit: www.annualcreditreport.com They will ask several questions to insure security and also ask you to pay for an upgraded report, but a free report is available.
I hope you find this information helpful. I feel we all need to be more careful about using credit. But credit can be a useful tool when we need it.
~ Barry
Rates on 30-year, fixed-rate mortgages averaged 4.85 percent for the week ending March 26, following an announcement by the Federal Reserve that it is launching a new effort to assist the U.S. housing market. The rate marked a record low in the history of the Freddie Mac survey. The previous low was 4.96 percent set during the week of Jan. 15.
To read the full story, http://takeaction.realtoractioncenter.com/ct/v1Sgy951oERI/
