A new law has been introduced to help those who cannot afford a mortgage, and it could save many families millions.
The Housing Finance Regulatory Authority (HFRA) said it had issued guidance to help ensure lenders would not use the term emergency loan to describe homes they are considering selling.
“If you have no home loan, you will be able to use the terms emergency loan, emergency mortgage, emergency loan-in-lieu-of-a-home, emergency sale or emergency loan as they relate to your circumstances,” it said in a statement.
In a separate development, the Federal Reserve announced it was lowering interest rates on some mortgages, to a rate of 1.5% on mortgages with an outstanding principal balance of $500,000 or more.
The central bank’s decision means those with a mortgage with a principal balance below $500 million can now borrow at 3.8% a year.
This is the same rate as the Fed cut last week, to 1.75% a month.
Those with a balance above $1 billion will pay a 2.25% rate.
The Fed said the policy was designed to help households “whose income falls short of their mortgage payments”.
“Lower interest rates help to alleviate household financial stress and help to make mortgage payments manageable,” the Fed said.
Many of the borrowers will not qualify for a lower interest rate than 3.75%, but that is the rate the Fed is likely to continue to hike as inflation accelerates and the US economy slows.
More on the US financial markets:The move to lower interest rates comes as the Federal Government plans to announce an increase to stamp duty for stamp collectors, after years of budget cuts.
The stamp duty rise comes after the Treasury estimated that stamp collecting receipts had fallen by about $1.6bn over the previous year.
The Federal Reserve said stamp collecting was a key part of the US Treasury’s financial stability portfolio, and would remain so.
A higher stamp duty rate means stamp collectors will be paid more, but the increase is expected to help offset some of the damage to the economy caused by the US recession.
The US economy grew by a solid 0.3% in the second quarter, compared with the 0.2% expected by economists surveyed by Reuters.
The unemployment rate dropped to 4.4% from 4.7% in October, although that is still far higher than most developed economies.
The economy added 288,000 jobs in the first three months of the year, the weakest rate since May.