Federal Reserve Bond Purchases May Taper Off Soon - A New Article From LoanLove.com Has The Details
SAN DIEGO, Aug. 30, 2013 /PRNewswire-iReach/ -- LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. The Loan Love website is progressively adding articles and guides daily to help home buyers and loan borrowers find the loan they deserve. In a newly announced article, the team at LoanLove.com speaks their minds on the Federal Reserve bond purchases and how it will affect future consumers.
The Loan Love article, "Federal Bond Buying Program Predictions (Volatility Ahead)" begins by giving a brief summary of the Federal Reserve and their bond purchasing program. As the article states: "…T-bonds (short for treasury) have certainly been in the news lately, thanks to the Federal Reserve and its popular (among homebuyers, anyway) bond-buying program. The Federal Reserve began buying bonds to help stimulate consumer spending in an effort to prop up the sagging economy. The measure was meant as a temporary stopgap until the economy showed signs of improving over the long haul. Now that housing sales have been rising and unemployment has been falling, the Fed has begun to consider phasing out the bond-buying program , a move that has homebuyers, lenders and investors holding their collective breath."
This is pivotal for home buyers everywhere; As long as the Federal Reserve Bond Buying program is in act, home buyers can take advantage of the low interest rates and thus, have cheaper credit and mortgages. The bond buying program was designed for the sole intent of persuading customers into buying loan products which will in turn help increase confidence in bond investments. Bonds are inversely fixed to long-term and short term interest rates in this sense. As the article explains, when bond rates rise, interest rates fall which will equals lower mortgage rates.
However, with the U.S. economy make a progressive recovery, the Federal Reserve is seeking to completely lay off the bond purchasing program. The original intent of the bond purchasing program was to make getting loans and credit an easier process. But this was always meant to serve as a temporary solution to a weakened economy. Now, with economy making a comeback and the bond purchasing program coming to a close, interest rates are expected to fluctuate in return. The Loan Love article had this to say further:
"So – that's why interest rates are rising now . What does this mean for the future? Like any security (stocks or bonds), when there's a major shift in the environment in which the security is traded – in this case, the cessation of the fed buyback program – you can expect considerable fluctuations in the market as people take bets to try to earn some fast cash. Over time, though, consumers can expect mortgage rates to level off once again – though at considerably higher rates than, say, a year ago."
Loan Love iterates the importance of the termination of the bond purchasing program. Once the Federal Reserve ends the program, rates are expected to return to the normal, higher values from before, unlike the low interest rates recently experienced. "The moral of this story for potential homebuyers: Lock in your rates now as a hedge against rising rates in the future" advises the Loan Love article.
For more information on Federal Reserve bond purchases, please visit LoanLove.com.
Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, email@example.com
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