However, it is possible that consumer spending may be slowed by continued elevated joblessness, slow increase of wages, lower levels of capital and credit that is difficult to obtain. Also mentioned was the fact that there is a slowdown in both the business real estate and residence building markets.
No alterations were made by the Fed in a program under which they buy 1 1/4 trillion dollars in mortgage securities from both Freddie Mac and Fannie Mae, which is to come to an end on March 31. There is some apprehension that, with the end of the program, mortgage rates may possibly go up. One economist believes that, when the program comes to an end, the present interest rate of around 5% for thirty year fixed rate mortgages may increase by one quarter to one half a percent. An increase in mortgage interest rates would indicate an increased desire for mortgages as buyers hurry to get in on the tax credit for home purchasers that is due to expire on April 30. Should this happen, recovery of both the real estate markets as well as the entire economy could be put in jeopardy. The Fed does have the option of continuing the program should negative signs appear.
