Federal Reserve Holds Interest Rates, Allocates Additional $1.15 Billion

In anticipations that economic conditions will warrant exceptionally low levels of the federal funds rate for an extended period, the Federal Reserve has decided to maintain the federal funds rate at 0 to 0.25 percent.

However, the Federal Reserve has decided to pump an additional $750 billion into the purchase of mortgage backed securities (MBS), bringing the total of MBS purchases to $1.25 trillion. The Federal Reserve is also going to pump an additional $100 billion of purchases of agency debt, bringing that total to $200 billion.

The additional funds for MBS’s and agency debt is designed to provide greater support to mortgage lending and housing markets. According to the Mortgage Bankers Association the current average for a 30 year mortgage is 4.89 percent while overall mortgage applications increased by 21.2 percent.

Finally, the Federal Reserve is going to pump in an additional $300 billion into longer term Treasury securities over the next six months. This move is designed to improve conditions in private credit markets.

The Federal Reserve is also launching the Term Asset Backed Securities Loan Facility which is designed to extend credit to households and small business. The Federal Reserve also anticipates that the Term Asset Backed Securities Loan Facility will expand to also include other financial assets.

For more news about the Fed meeting and mortgage rates visit Future Planning Financial at www.fpf-direct.com.