Best Moves in a Bad Economy Blog

Rates for 30-year fixed mortgages fell to 5.5% from 6.38% Wednesday morning thanks to a new $800 billion plan announced by the Federal Reserve. The Fed will buy $600 billion mortgage-backed securities from Fannie Mae and Freddie Mac by year end. It will also purchase $100 billion in consumer loans next week. This frees up loan funds for the two agencies, and helps to restore confidence in the mortgage market. (Source: Barron's, The Fed Tries to top TARP, November 26, 2008)

What It Means to You

If you are facing an interest rate reset and higher monthly payments, now would be a good time to refinance to a fixed-rate loans. Even though LIBOR rates have come down from earlier summer highs, there is still a lot of volatility in financial markets, and it is better to be safe than sorry.

Related Aticles

• What Is the Fannie and Freddie Bailout?
• Did Fannie and Freddie Cause the Mortgage Crisis?
• Federal Intervention in the Financial Crisis

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• Debt to Income Ratio