• The Federal Reserve is considering a new tool never before used that could help the housing market.
  • The Fed will permit banks to borrow from the Fed at even lower interest rates, but on the condition that the borrowed money must be lent out to main street (rather than being used to buy Treasury bonds for example).
  • The housing market is recovering but only at a modest pace because of excessively strict underwriting standards.  So this new policy will surely boost home sales further.
  • For consumers who can qualify now, there is no reason to wait since interest rates today are at rock bottom rates.  But for those consumers who have been denied a mortgage, there could be a second chance once this new policy goes into effect, though the interest rate could be little higher.  It will not be easy lending, but it is designed to just get us away from the overly stringent conditions.
  • Increased housing market activity will mean stronger economic recovery.  Let’s hope this new tool gets implemented soon.  So far, it is only in consideration phase.