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Fed Lowering Interest Rates to 4.5% -- Well Not Exactly -- But Close.

The news is buzzing with talk about the Fed lowering interest rates to 4.5% in an effort to increase home purchases. (Please keep in mind that this low rate is just talk...no banks are offering 4.5%). This idea is similiar to the recent Tarp bailout plan to purchase $500 billion in mortgage-backed securities from Fannie Mae & Freddie Mac, along with the options to buy out another $100 billion in low performing mortgage debt.

This news of the Government's help has caused bond prices to spike, forcing lower interest rates. It is important to remember that the Federal Government does not directly dictate home loan rates....they simply have the ability to influence buyer sentiments and investors by fueling cash in the market. Rates are determined by the price movements of Mortgage Backed Securities, which compete for investor funds in the market. With the governments fueling cash in our market rates are being held down superficially.

The truth of the matter is that we don't know what the negative effects of this potential bailout is going to have on interest rates or how our government will function in the future. What we do know is that current rates are 5%! A historical low for the last 48 years. This coupled with home prices down by upwards of 10%......Why isn't every first time homebuyer taking up this unique opportunity to purchase a home?

So the Gary McNinch Team is asking all our potential buyers "What are you waiting for?" We have the lowest rates in 48 years, the advantage of a recent home price reduction of up to 10%, and lots of first time homebuyer programs. Give us a call, visit our website www.RentonHomeFinder.com and search for homes.

Posted Thursday Dec 11