Less interest means more mortgages for homeowners

Many Kansas City homeowners, and some buyers too, are celebrating the holiday season with a welcome gift from the Federal Reserve Bank — a big drop in mortgage rates.

A month ago, the interest on a 30-year fixed mortgage was hovering around 6 percent, but last week it fell to 5.14 percent after a mid-December decision by the Fed to cut the rate charged banks to as low as zero.

The Fed also promised to pump money into the mortgage market and other consumer credit markets to ease the credit crunch.

The response by homeowners has been dramatic. Mortgage applications nationwide jumped 48 percent last week, according to the Mortgage Bankers Association.

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