Loan interest rates are at the top of mind for most every consumer and business owner in today’s economy. The economic collapse that led to one of the worst recessions in the past fifty years has affected every borrower in the country. The government quickly approached the FOMC to work to create a plan to free up capital and help keep the economy moving forward by drastically lowering interest rates. The drop with Fed interest rates helped bring down rates on car loans, credit cards and mortgage loans, helping consumers and businesses improve their financial balance sheet with lower payments.

Consumers and business owners who have been able to obtain a loan over the last two years should have benefitted with historically low rate loan offerings. The drop with interest rates allowed banks to continue borrowing money from the Federal Reserve and benefit with improved margins, while offering consumers incentives to refinance their home mortgages and businesses to benefit from lower rates on their variable rate credit loans. The ability for borrowers to obtain low rate financing was a key component with the government pushing the Federal Reserve to aggressively assist to help contain the economic crisis.

The prospect of low interest rates being available for the balance of the year were all but guaranteed by Chairman of the Fed Ben Bernanke in testimony last week. The Fed has made clear that they will not look to raise rates without a strong signal that the economy is on solid footing. The Fed will closely monitor the labor markets with an expectation that the economy should start producing new jobs in the second half of 2010 as well as the real estate market to monitor home sales. Consumer confidence is certainly an area that has been hurt by the economic catastrophe and the Federal Reserve and government are both acutely aware of the lack of confidence main street has in the government as well as banking industry.

Lending will continue to draw the highest scrutiny from the public and government as groups monitoring the banking industry will try to push for additional funds to help spur growth. To date, the banks have been very hesitant to begin lending to small business owners and consumers who have sought out personal loans. The lack of financing by the lending market has been detrimental to helping create job growth as well as spur purchasing which could help the economy. Consumers who historically obtained signature or personal loans from their banks have found limited financing options for borrowing money without collateral in the new banking world. Limiting these options tends to push consumers into higher rate alternatives such as cash advance loans, payday loans and credit card cash advances. Savvy consumers are also exploring beginning relationships with credit unions, which have significantly grown in popularity over the past twenty four months with their ability to fulfill a critical portion of the lending market.

Interest rates should stay low and this is the best news for the market, as additional financing options become available to consumers and businesses look for a heightened pace to the economic recovery.