Can the government help ease the interest rate rises on home loans? If so what/when will this happen?

Question

Its hard enough to afford the simple life E.g. Food, Bills, Car Registration. But with the constant rises in interest rates on home loans it makes it even harder for the average home loan and even harder on someone wanting to get a home loan.

Answer 1

The over riding governance on interest rates is the Federal Reserve System.

However, the sharp increase in real estate values over the past years makes no sense to me.

Your average home was once an affordable expense when it was worth only a hundred thousand dollars.

In this market, we see ridiculously priced homes, everything from studio apartments to small mansions...all priced way above the means of ordinary people who comprise the bulk of the population.

What is taking effect now is that as the people keep losing good paying jobs to downsizing, they in turn move in to cramped living quarters.

This in turn results in a glut of real estate sitting with for sale signs that could stay for sale for a long time.

Unless prices get reduced to where people can actually afford them, the shaky condition of the real estate market could lead to further economic trouble.

The stimulus that the Federal Reserve can provide by lowering interest rates will ease the burden, but never enough to give the general population the needed relief for these astoundingly high real estate costs.

In effect, we have a shaky economy hinging upon what real estate will do. Some prosper by buying and selling, never considering that people's income should dictate what real estate should sell for.

No slight decrease in interest rates will solve this growing problem.

Only drastic reductions in the costs for real estate can revive the interest in buying real estate again.

Those willing to sell property should consider lowering them to where a greater pool of potential buyers will buy without having future problems as interest rates change.

The greed factor will ultimately turn the American Dream into a nightmare.

Don't depend on what the government can do...their hands are tied now that they have a run-away national debt and bad fiscal policy.

Answer 2

Mortgage rates on conventional thirty year fixed rate mortgages are very affordable, at rates slightly under 7% annually.

The folks in trouble are those who stupidly took ARM mortgages on the silly assumption that they could refinance in a few years 'when they could afford to'. They are now getting what they agreed to.....adjustable interest rates.

As a real estate broker, I still regularly encounter folks with good credit who qualify for these loans with not a lot of money down, since their credit is good, they have stable incomes, and they're engaging in a fixed rate mortgage.

You are apparently too young to recall or know about mortgage rates in the early 1980's, when the standard rate was 15%, and fixed rates were simply NOT available.

Answer 3

Mortgage interest rates go in cycles. They drop down as far as about the mid 4's and up to around 16 or 17%.

We're still in the range where we should be jumping for joy at the low interest rates we're getting.

Answer 4

that is up to the Federal Reserve Bank (the bankers bank as its somewhat known), they set interest rates on what they give out to the various banks within the nation, which influences the ammount of inflation we have (if the rate goes higher their trying to fight inflation).

however, the members of the FRB do not have anyone to answer to, and they cannot be impeached. they also have a 13 year term.

so, its kinda-yes and its kinda-no. yes, the FBR can lower their interest rates on the nations banks to help stimulate the economy, and also help out those on tight budgets. no, neither bush, nor the senate, nor any other person within the government, can force them to change rates.