Federal Reserve Policy Continues to Drive Record Low Interest Rates, Says Freddie Mac Economic Report

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According to Freddie Mac (OTC: FMCC) latest U.S. Economic and Housing Market Outlook for September 2011, U.S. monetary policy coupled with fiscal stimulus could accelerate growth in 2012 if the fiscal initiative operates in tandem.

Freddie Mac's chief economist Frank Nothaft tells the World Property Channel, "Financial worries among consumers are likely holding back home sales, which remain lackluster despite the most affordable home-buying market in decades. Boosting job and income growth among households will support consumer confidence and also stimulate household formation.  With monetary policy expected to keep interest rates low for a while, affordability will remain high for potential homebuyers. In the meantime, many will choose to rent."

Key Report Highlights

• The Federal Reserve's accommodative policy has resulted in the lowest interest rates since the early 1950s.

• Ten-year constant-maturity Treasury yields had averaged 2.0 percent through September before the Federal Open Market Committee's statement, already on track for the lowest monthly average in the 60-year history of the series.

• Thirty-year and 15-year single-family fixed rates attained new lows in Freddie Mac's Primary Mortgage Market Survey in September.

• The likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market's recovery.

• Coupling monetary with fiscal stimulus could accelerate growth in 2012 if the fiscal initiative operates in tandem.

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