Foreclosures Rise In November
Friday, December 14th, 2007To avoid recession Federal Reserve has cut down key lending rate. Meanwhile foreclosures triumphantly marched on apace in November. The rate was slightly higher than that of November 2006.
In Racine County last month there were 74 filings. A year ago the number was 71. 729 foreclosures had been filed through November – an 11% rise since a year ago, when the number was 658. This year (2007) has seen high levels of foreclosures in contrast to the past year. From 2005 it was a 34% rise across the states. This year 89 foreclosures have been filed on every working day.
Alarmed at the uncontrolled rise of foreclosures, on Tuesday the Federal Reserve reduced interest rates for the third time during the past four months, aimed at reining in foreclosures. Federal funds also were cut by a quarter point bringing the federal funds rate to 4.25%. It is anticipated that the commercial banks will try to match these steps by pruning their prime lending rates. That would bring down the standard rate for millions to 7.25% - the lowest in a span of two years. Signals are being given out by Federal personnel that further cuts might be imposed if the foreclosure crisis begins to get worse.
The Fed had started pruning rates in September with a move of half point. This was followed by reducing funds rate by a quarter point at 31st October meeting. In addition the Fed declared that it was cutting down on discount rate also by a quarter point – to 4.75%. This is the interest being charged to make direct loans to banks. The idea was that banks could now borrow easily from the Fed. This is of special importance at this point of time when bad loans will compel banks to tighten credit. Without being able to take loans who will buy houses? Without buyers how will the real estate market stabilize?
The Chairperson of Fed, Ben Bernanke and his colleagues are worried about recession and desperately taking measures. Experts opine that this quarter and the one following it will be of vital importance to the economy. The economy is besieged on all sides with social problems dogging its steps. In 2008 the economic growth will record a weak 2.1% in the coming year. It would be the weakest GDP in the last six years. Foreclosures are now stepping into the rural areas with unabated ferocity.
