Help For Main Street

This morning Secretary Treasurer Henry Paulson announced a big step by the Federal Reserve to unfreeze credit for home buyers, consumers and small businesses, committing up to $800 billion.

Although the terms are still somewhat vague, some basic details were announced:  the Fed will purchase as much as $600 billion of debt that is issued or backed by government-chartered housing-finance companies.  A new $200 billion program will be implemented by the Fed to support consumer and small business loans.

These steps by the Fed are geared towards the consumers and small businesses as we’ve seen the credit markets tighten significantly in recent months.  The housing finance market today reacted positively early in the day with rates on a 30 year fixed at 5.5% (5.678% APR).  By the end of the day, the volatile rates inched up, but finished off at a 2 month low.

I can see and feel the government making pushes to restore consumer confidence with the recent intervention.  From the perspective as a loan officer I can see the short term benefits, such as the low rates available today.  However, we’ve seen pockets of opportunities with nearly every announcement by the Feds/Treasury.  I am anxious to see where this money will be spent and if it will have a lasting impact in the consumer and small business finance sector.