****I Admit that I don't know anything about Economics*****
****This is probably a stupid question******
But here it is anyway:
I was thinking about my current financial situation, and what would be the one thing that would make the most change in my budget. It's pretty obvious that most people's, including myself, largest monthly expense is their mortgage payment. Currently my mortgage rate is 6%, which I am aware is a bit high for the current rates, but if it were half that at 3% it would make a big difference in my budget.
If the government could somehow create a program where mortgages could be financed at a much lower rate than current rates, I think that would stimulate a lot of areas of our economy.
I'm guessing there must be some serious negatives to lowering interest rates that much, but I admit that I am very uninformed when it comes to this subject. I know that the Fed changes the rate at which it loans money to banks, and it is probably very low right now. So I am not sure how it could be done. It just seems like we pay way too much money to banks right now for mortgage interest. Their profit margin for these loans seems to be way different than any other type of business.
Could someone tell me why my idea is not valid or why this could never happen?
I think this would stimulate the housing / construction industry, and also put money in the pockets of the typical homeowner.
****This is probably a stupid question******
But here it is anyway:
I was thinking about my current financial situation, and what would be the one thing that would make the most change in my budget. It's pretty obvious that most people's, including myself, largest monthly expense is their mortgage payment. Currently my mortgage rate is 6%, which I am aware is a bit high for the current rates, but if it were half that at 3% it would make a big difference in my budget.
If the government could somehow create a program where mortgages could be financed at a much lower rate than current rates, I think that would stimulate a lot of areas of our economy.
I'm guessing there must be some serious negatives to lowering interest rates that much, but I admit that I am very uninformed when it comes to this subject. I know that the Fed changes the rate at which it loans money to banks, and it is probably very low right now. So I am not sure how it could be done. It just seems like we pay way too much money to banks right now for mortgage interest. Their profit margin for these loans seems to be way different than any other type of business.
Could someone tell me why my idea is not valid or why this could never happen?
I think this would stimulate the housing / construction industry, and also put money in the pockets of the typical homeowner.