Interest Rates Have Fallen Precipitously! Look at the Jumbo Rates as Well

So what happened? The Federal Reserve Board keeps saying the economy won't be able to fully recover unless financial markets resume moral functioning. The U.S. economy is under considerable stress and has downshifted further after the financial crisis of September. Interest rates though had continued to remain flat the last several months even with all of the dire news.

What happened is the Feds announced plans last week to buy up to $100 billion in agency debt from Fannie Mae and Freddie Mac, and to buy up to $500 billion in mortgage-backed securities.

Eventually, once this crisis has passed, the Fed will have to shrink its balance sheet by selling back the private-sector assets it has accumulated. But that is an issue for the future. For now, the goal of the policy makes must be to support financial markets and the economy. Courtesy of Kevin Budde of Countrywide Financial Services.