Archive for March 27, 2009

Mortgage Rates Expected To Decline

US housing market is also one of those reasons, which served the sudden downfall of the nation’s economy. The housing market bubble is now in a phase of downturn and seems to continue in wailing numbers for some more time.

Though the problem is not instantly resolvable, the Fed has started its plans to resurrect the market. The initial step in this process is to buy long-term government bonds and additional mortgage-backed securities. It is estimated to cost the Fed around $1 trillions.

This plan is also helping the economy in other way. As the government is expected to buy $750 billion in additional mortgage-backed securities, the mortgage rates are likely to decline. The decline is not going to be an ordinary one. As analysts say, the mortgage rates are likely to fall 0.25 to 0.5 percentage points.

Though, Fed is encouraging so much, the mortgage lenders are still restricting the availability of loans to people without a good credit and at lest 20 percent of down payments. It is discouraging many first-time borrowers from taking mortgage loans.

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US Encourages Investors To Buy Toxic Assets

Everything was fine before recession invaded our economy. Banks were working fine, real estate was good, jobs were stable, industries were safe, etc.

But did the thing happen all of a sudden? Were we so reckless about the economy that we waited until it was invaded?

The answer may be yes! Economic downturn in US did not happen in the past sixty years. This generation wasn’t aware of how to respond to recession, its early symptoms, and its impact. Had they known it, I am sure they wouldn’t have let it happen.

Since everything was going very fine, especially, since past two years before the recession, banks were in a mood to try something exciting. The result is the $1 trillion toxic assets that took the entire global economy along with their industry.

Now, the Fed is set to get rid of the cause of the recession. It is encouraging investors to buy these toxic assets; and is aiding it with $75 billion to $100 billion program.

The US share market showed their optimal to the plan by inclining their 12-year low major indexes to 7 percent.