The Federal Reserve took a courageous decision by accepting 200 million of housing debts as collateral to promote liquidity in the housing market and give some relief to the banks brokerages. The banks and other financial institutes are facing cash crunch and even after five rate cuts within the last few months experts believe that this is not much effective. So FED came up with this program to eliminate the credit crisis.

This is the first time when FED is accepting the housing debts as collaterals.  Fed has assured to offer 200 billion dollars in a new Term Securities Lending Facility (TSLF) with a term of 28 days. The loans will be given with an auction process and it will start from 27th of March 2008. Fed has also declared that they may raise the amount of loan that they make available to the banks to 100 billion. FED has been injecting billions of dollars into the banking system to help the economy to get out of this credit crisis.

[tags]credit crisis, housing debt collateral, fed move[/tags]

Mortgage rates have been increasing for last three weeks but this week rates on 30 year mortgage rose highest in the last three months. Last week it was 6.04 percent but now it has been increased to 6.24 percent in this week.

On November 15th 2007 it was also 6.24 percent. But since then we saw a steady downfall in the mortgage rates. During January 2008 the rates were falling steadily and refinancing had hit 12 months highest in that month because homeowners were trying to take advantages of the lower rates to make their monthly payments lower.

Other mortgage rates have also been increased in this week. Rates on 15 year Fixed rate mortgage rose to 5.72 percent whereas it was 5.64 percent last week. Rates on 5 year ARM rose to 5.43 percent compared to last week’s 5.37 percent and rates on one year ARM rose to 5.11 percent compare to last weeks 4.98 percent.

[tags]FRM, Fixed Rate Mortgage, Refinancing, Mortgage[/tags]