Well, our short-lived lower interest rates, spurred on in part by the anticipation of The Treasury Department's bailout plan, hit a snag over the past few days. Ironically, the catalyst for the rate increase was the uncertainty of the details of the same bailout plan as lawmakers took varying positions on what was best for the country.
The biggest increase on the week's interest rates occurred on Friday of last week and continued Monday as more objections were laid out by lawmakers to the more than 700 million dollar bailout plan. Rates leveled off during the remaining days of the week as Treasury Secretary Henry Paulson and the Federal Reserve Chairman Ben Bernanke traveled to Capitol Hill in an attempt to relieve the anxiety of senators and representatives. Rates for the week averaged 6.32% according to a Bankrate.com survey of major lenders. The rate for the same timeframe one year ago was 6.49. Four weeks ago the rate was 6.6%.
Blaming the poor housing market for the financial turmoil in which the country is currently embroiled, Bernanke and Paulson noted that lenders are holding hundreds of billions of dollars in bonds that are backed by mortgages issued to homeowners who can't afford to make the payments on their homes.
If you're wondering why this situation would have such an impact on credit worthy buyers, the answer is that banks are reluctant to lend money to one another, fearing that their once reliable, trustworthy lending partners might go out of business because of poor mortgage debt and they won't be repaid.
Bernanke and Paulson are optimistic the bailout plan will be resolved soon. I think this is a must and it will happen. When it does, perhaps home mortgage rates will once again fall below the 6% mark and our economy will get on to the long road to recovery.
To view other articles by Ed Barrett, please go to: www.EdBarrettHomefinder.com