Mortgage rates may continue to linger at or near historical lows through the next two years, according to a recent article on HousingWire.com. According to the article, “the Federal Open Market Committee said it will keep interest rates low at least through 2014 but will not yet act on further stimulus to a slow-growing economy.”
The Federal Open Market Committee is a section of Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks. According to the article published on Aug. 1, the Committee plans to closely monitor economic and financial information as it comes in while simultaneously providing support as needed to promote stronger economic recovery.
“The target rate of funds will remain between 0% and 0.25% for the next two years, unchanged since the Fed lowered it coming out of the financial crisis in 2008,” Housing Wire states.
To clarify, this does not mean new mortgages will carry a zero percent interest rate – rather, these figures represent the interest rate at which banks and other financial institutions lend money to each other. These figures will inevitably affect other interest rates as well as inflation, so it stands to reason that as the FOMC rates may help keep consumer rates low.
For further reading:
Housing Wire article (http://www.housingwire.com/news/fed-keep-rates-low-through-2014-still-waits-stimulus)
What is The Federal Funds Rate? (http://en.wikipedia.org/wiki/Federal_funds_rate)