Monday, February 2, 2009

Mortgage Rates Lowered to 4.5%

Jin Zheng

By Tami Luhby

Reducing mortgage rates to a historically low 4.5% may entice some homebuyers out of the shadows, but it won't be enough to really spur housing sales, experts said.

Only a week after the Federal Reserve unveiled a $600 billion plan to reduce mortgage rates, the Treasury Department is considering adding to the effort to lower rates even more. Both moves are intended to get more buyers into the market in hopes of stabilizing home prices and reviving the economy.

While Treasury officials are keeping mum about the latest proposal, lobbyists said Thursday it is aimed at reducing rates to 4.5% only for people buying homes. Those looking to refinance would not qualify.

There's no doubt, experts say, that the government needs to provide incentives to homebuyers.
Until now, all efforts were focused on addressing the record number of mortgage delinquencies. This should remain the priority, experts say, but it should be coupled with increasing demand for homes.

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