Lower interest rates unlikely to speed up housing recovery

While lower interest rates have caused many Americans to consider refinancing options, experts say that that alone will not speed along the recovery of the housing market.

Last week, the Federal Reserve made a move to buy close to $40 billion each month in government mortgage-backed securities until the jobs industry makes a significant recovery. This will hopefully lower mortgage rates and other borrowing costs for consumers and businesses.

As reported by USA Today, the short-term goals of the Fed's purchases will lift stocks and increase housing sales and prices, in turn raising the net worth of many Americans. 

"To the extent that home prices begin to rise, consumers will feel wealthier, they'll feel more disposed to spend," Fed Chairman Ben Bernanke said to the news source.

Multiple reports show that Americans have been working toward refinancing options, trying to take advantage of lower mortgage rates. According to TrimTabs Investment Research and the Mortgage Bankers Association, the lower rates significantly increased the amount of mortgage refinancing from March to July.

While the overall recovery is on its way, RealtyTrac's Foreclosure Market Report for August showed that Illinois became the state with the highest foreclosure rate. Last month, one in every 298 Illinois housing units had a foreclosure filing.

Furthermore, the state saw homeowners file for foreclosure 29 percent higher than in July, and on a yearly basis, foreclosure starts were up 18 percent.

With the housing market continuing to slowly work its way back to the top, lenders would be wise to ensure that they are using an amortization schedule for loans. This will also benefit borrowers, as they can rest assured that they were given a repayment plan suited to their financial needs. Additionally, loan management software can help create the right type of loan, from which an amortization schedule can then be made.