Refinancing existing mortgages at lower rates One way to reduce the flow of foreclosed homes is to ease the payment strain on borrowers, which can be accomplished by modifying loans that are past due or by refinancing performing loans at lower rates.
The Federal Reserve has already acted to lower longer-term interest rates, including mortgage rates, through the purchase of longer-term Treasury securities, agency debt, and agency mortgage-backed securities. In addition to enabling more buyers to purchase homes, low mortgage rates act to reduce the debt service cost of existing household debt.