The Need For A Low Mortgage Interest Rate

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To say that the U.S housing market is undergoing a slump will be an understatement. And the reason is that the low mortgage
interest rate that fuelled the boom has ended with the Fed now hawking about inflation.

This present high interest mortgage rate has led to a slowdown in housing stats and profits have slumped for many builders
with many complaining of empty lots.

Should the Fed reduce mortgage rates? This will not be a bad idea as it will lead to a recovery in the housing market.

Inflation however still seems stubborn as underlying inflation is high.

The good news is that inflation will come down to levels acceptable to the Fed within the year and the further increases in
the base rates will stop.

Once inflation has been slain, the Fed can begin a policy of cutting interest rates and this will have a positive effect on
the housing market.

Low mortgage interest rate will have the most beneficial effect on the sub-prime lending sector which is reeling from the
present high rate regime.

Its client basically consist of deadbeats and their situation worsened when interest rates shot up.

The sub-prime lenders worsened matters by not being thorough when granting credit to these high risk individuals and now
paying the price. Many did not factor in the risk that such individuals carried.

A low mortgage interest rate regime will truly benefit these ones the most.

Others too will benefit especially first time buyers and those that refinanced their properties from lower mortgage rates.

Let us hope that by the end of the year the U.S will be enjoying a low mortgage interest rate.

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