Fed $600 Billion Plan Keeps Interest Rates Low in California

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The Federal Reserve has purchased $600 billion of government bonds to keep interest rates low for U.S. homeowners. California homeowners can take advantage of low interest rates at http://www.lowvarates.com.

Low VA Rates

The California housing market is one of the best in the nation right now

The Federal Reserve recently announced its latest effort to help U.S. homeowners by purchasing up to $600 billion of government bonds through June 2011.

The mass expenditure by the Feds revolves around the desire to keep lending rates low. The past six months have provided record lows for home interest rates with rates consistently below 4.5% and currently around 4.25% for a fixed 30 year loan.

The Fed hopes the large purchase will loosen the supply of credit and stimulate the economy and help potential homeowners save money on low interest rates.

For California homeowners, the $600 billion Fed purchase will help the housing marketing continue to be one of the best buyers market in the nation.

Owner of Low VA Rates, Eric Kandell, feels the $600 billion dollar purchase is a huge boost for buyers and particularly in California.

“The California housing market is one of the best in the nation right now,” Kandell said. “When you consider the interest rates are as low as 4% and the housing market is dirt cheap, there has never been a better time to buy a home in California.”

According to the Los Angeles Times, pricing in the California housing market fell 4.2% in October and is ranked as the third best housing market in the nation.

In the past three years, the Federal Reserve has reduced the Fed Funds target rate 10 times. The Fed wants to reduce the target rate to help more eligible homeowners qualify for and secure homeownership. Since the major fall of 2008, the Fed has made a number of strategic moves to keep interest rates low.

The other major purpose of the Fed bond purchase is to have more control over long term interest rates. The purchase of bonds helps drive prices up and conversely helps home and other interest rates drop.

This is not the first time the Fed has attempted to drive prices up. In 2009, the Fed bought over a trillion dollars of mortgage-backed securities in an attempt to salvage the plummeting housing and lending market. One of the main affects of the trillion dollar purchase was the lowest interest rates in the history of the lending market.

Many current homeowners looking to sell, particularly in California, are caught in a tough situation with skewed prices devaluing their property. However, homeowners looking to sell may decide to hold off and refinance their home loan saving hundreds of dollars a month.

“If homeowners are having a hard time selling their house it may be wise to hang tight and look at getting locked into a lower interest rate,” Kandell said. “There is no reason to accept a 5% or higher interest rate with the current condition of the market.”

The $600 billion dollar purchase will not take place all at once, but will be spread throughout the next eight months with an estimated $75 billion spent per month. This will likely not be the last purchase by the Fed to help control rates and spur economic growth.

ABOUT LOWVARATES.COM
For the past 20 years LowVARates.com has been dedicated to serving veteran homeowners. We specialize in providing California VA loans to qualified veterans for mortgage purchases and refinances. These loans provide lower interest rates and monthly payments than other traditional or conventional loans.

VA loans are currently the only program left that allows no-money-down loans providing a secure mortgage option guaranteed by the Federal Government. Our professional staff and loan officers will assist you to lock in low interest rates and take advantage of the unique opportunity provided through VA loans.

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Craig Walton
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