Low interest rates can be very helpful when you are in the market for a home or an auto loan. An overwhelming number of houses on the market combined with a lack of home buyers along with low interest rates are making this a home buyer's market. Low interest rates are sweeping the market and some home buyers are taking advantage of these low interest rates to refinance their mortgages. Low interest rates are introducing many new home buyers into the housing market, homes at the lower end of the price scale have been selling extremely well, according some Real Estate Agents. While low rates are great news for those looking to refinance or buy, they are a challenge to those institutions who depend on interest income to make a living.

News

Even better news is the that the interest charged on some Adjustable Rate Mortgages "ARM's" is at a level that has not been seen in forty years. With the news that interest rates on a 30 year fixed loan have dropped below 5 percent

Economy

While the US economy is definitely having some serious difficulties, there are other forces in play which do suggest that this could end up as a serious recession but not a crisis according to some analysts. While the US Fed has cut rates dramatically, the full impact of the lowered rates on the economy is not yet seen. Since it appears that the economy is indeed now in a recession and that the FED will cut interest rates as low as they possibly can before the end of the year, some investors are worried that the demand for mortgages will decrease by early next year. Low interest rates might be less of a stimulus and maybe more of a symptom of a poor economy, and for reasons mentioned above, analysts say there most likely will not be a change in rates for at least the first half of the year.

Investment

Research shows that close to 90 percent of consumers retirement income comes from investment earnings. The investment giant Bear Stearns posted its first ever quarterly loss of $854 million. In a statement made by the Fed; said that since its last meeting late in October, "labor market conditions have deteriorated, and all the available data indicates that consumer spending, business investments and industrial production have declined."

Markets

Global borrowing's in the international markets are up 22 percent and at a daily rate of more than 5 billion dollars. Ever stronger trade and financial links are promoting even further international division of labor and expanding markets are holding out the promise of any gains in productivity and standards of living globally. Here lies the main responsibility of all governments, to provide a solid and predictable framework where markets can flourish.

Many borrowers fueled by Fed's plan recently to buy up to 600 billion dollars in mortgage backed securities issued by Fannie Mae and Freddie Mac, and record low interest rates, are coming out to refinance their mortgage. Government housing officials hope the low rates will also motivate home buyers to jump at the currently low rates and purchase right now instead of waiting for the market to completely bottom out.