The United States economy must be really going on a recession as the Federal reserve cut the prime lending rates again by 0.5%. The prime lending rate is now standing at 3%. It seems just last week that Chairman Bernanke reduced the rate by 3/4 of a percent for fear of the nation’s recession due to the housing crisis and the decline of the dollar. Because of further increase in home foreclosures and the threat of skyrocketing gas prices, the Fed has to make another move.

The reduced rate will not affect the mortgage rate in the short term but eventually it would follow the decrease.

A closer look at the government’s economic stimulus:

-$150 billion in tax rebates to pump the economy
- Fed prime lending rates down to 3%
- Mortgage/ sub-prime help such as tax breaks for debt forgiveness, rate freeze for some eligible homeowners, increase in the Freddie Mac and Fannie Mae’s mortgage loan to at least $600,000, mortgage refinance for ARM resetting without incurring any penalty, etc.