Great News For Home Equity Loans

[Jan 31, 2010.]

 

Good news from the Federal Reserve this week. The interest rates on your home equity loans should remain low for a while longer.

How the Rates on Your Home Equity Loans Work

The interest rates on your home equity loans are most likely based on Prime Rate. Prime Rate usually tracks the Fed Funds Rate plus 3%. The Federal Reserve's Federal Open Market Committee (FOMC) is the body that decides when to raise or lower the Fed Funds Rate. The FOMC decided this week to leave the Fed Funds Rate unchanged, signaling several more weeks of cheap home equity loans.

The Current Fed Funds Rate

The Fed Funds Rate has been at 0.000% - 0.250% for over a year. The Feds have been keeping interest rates low in order to stimulate the economy. As the economy shows signs of slow growth, the FOMC has been considering when to start raising the key interest rate. Interest rates will have to go up as a tighter monetary policy becomes appropriate, primarily to fight inflation.

What the FOMC Said this Week

The committee's press release reiterated that interest rates on loans should remain low for an "extended period." While it may feel like you're hearing the same old news, there was something different this time. One of the Fed governors dissented, making the vote to keep interest rates unchanged at 9-1. Kansas City Fed President Thomas Hoenig commented that the economy was doing much better and that low interest rates should not be expected to continue. This may not seem like big news, but it is a change. If the next time the FOMC meets, another governor dissents, it will surely mean that the FOMC is nearer to raising interest rates.

Find a New Home Equity Loan

Because home equity loans are so cheap, now is an excellent time to use the equity in your home for college tuition, home improvements, or credit card debt consolidation. The equity in your home might be the answer to solving any number of problems you may be having. Use the equity to start a business or meet other life goals. A new home equity loan can make a big difference in your life. Speak to a lender about home equity loans today.

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.