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Federal Reserve decision impacts residential financing

Posted on Friday, September 20, 2013 at 11:26:52 AM

The recent policy meeting for the Federal Reserve concluded with the announcement that the organization's bond-buying policy will stay in place, at least for now. 

While the Fed's program might appear complicated on the surface, in essence many view it as a method to keep down interest rates, as well as maintain affordable residential financing and stimulate the housing market, according to The Wall Street Journal.

Previously, Fed Chairman Ben Bernanke announced that as the economy improved and unemployment dropped, he would consider stopping the bond-buyback program, with many expecting a timeframe for this month. Instead, the policy stayed in place. 

When the Fed does decide to make changes, residential financing rates could increase, according to Forbes. The housing market might slow down, and higher rates might also have a negative impact on the federal budget. 

Those factors could be a reason why Bernanke and the Fed announced they were staying put, the news source noted. The program may be able to continue to keep interest rates down at the moment, which means more people might want to break into the housing market. If that's the case, when changes do happen it could be a slow process, so the economy isn't heavily affected.