The Federal Reserve’s Holiday Gift?
by Sarah on December 23rd, 2008
Happy Holidays! This season is a time for giving, especially to those in need. In the midst of our last-minute holiday preparations, it is easy to overlook the gift that the Federal Reserve has recently given. I know that varying opinions abound regarding the Federal Reserve’s past performance and decisions. Let us momentarily set aside those evaluations. I feel that the Fed’s recent decision to cut the target for the federal funds rate to a range between zero and 0.25 percent can be perceived as a gift. Many of you might have expressed, as I initially did, “A gift? From the Fed? In the midst of this economic crisis? But I’m a saver! What does this mean for my interest rate?” While a rate cut isn’t something you can wrap or put a name card on, this rate change does give the gift of hope to those stricken by the credit crunch and on the verge of homelessness.
Mortgage rates are at their lowest level in 37 years. This is great gift to almost all homeowners, even those to whom the recession has not financially impacted. Even a small decrease of 0.5 in your mortgage interest rate can make a financial impact.
The Fed’s rate cut enables ShoreBank to give, through its Rescue Loan program, the gift of increasingly affordable continued homeownership. As our SVP of Mortgage Lending and ShoreBank Voices blogger Michelle Collins said on Chicago’s abc7 News “The rates are coming down, so we’ve lowered our rates at ShoreBank three or four times over the last three or four weeks, and the fed’s continuing to cut rates to let us offer more affordable interest rates, so the time is great.”
For when mortgages become unaffordable, individual homeowners begin losing their homes and property values plummet. Since many of these affected borrowers are concentrated in a handful of communities, the impact of these cascading foreclosure is amplified. The net result can ignite a cycle of community deterioration.
That is why the Fed rate is a holiday gift to our economy. For those of you in need, all you need to do is to ask. I can think of few better gifts than one that prevents homelessness.
On that note, I wish you all a very Happy Hanukkah, Merry Christmas, and Happy Kwanzaa.
Tags: community development, economic predictors, financial crisis, green banking, Rescue Loan program, ShoreBank, triple bottom line
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Searched foreclosure impact on credit in msn but for some reason found this page.great info