SARAH KRAUSSE | staff writer

On Jan. 30, the Federal Reserve cut interest rates again, leaving the Federal Interest Rate at three percent, the lowest since 2005, and the largest single reduction since 1982. It was done in an effort to spark our economy out of recession.

With lower interest rates, it is cheaper for banks to borrow and lend money, so they, in turn, can lower rates for individuals and corporate borrowers, on everything from home loans, to student loans, to credit card debt. Lower interest rates encourage people to buy more, thus creating higher demand and increased production. Businesses also find it easier to expand during periods with low interest rates.

The APU student asks, “Does this means my student loans will accrue less interest to pay back in the long run??” The answer is ‘probably not,’ according to Peggy Sciarillo of APU’s Student Financial Services.

“Stafford Loans aren’t affected. They’re federal loans with an interest rate set once a year on July 1,” Sciarillo said. “The other types of student loans are private, and variable interest rates, which means they re-adjust every three months. They might be affected by the federal rate reduction, but it’s too early to tell.”

Well, what about credit card debt, the eager student asks? If your interest rate is higher than 11% to 14%, now is a good time to look for better offers, Tom Speight of the Stein Financial Group said. Financing rates on a new car purchase may be better now as well.

The cut in interest rates could also benefit recent graduates, according to David Reid, who teaches a course in real estate at APU.

“With home prices going down and interest rates low, this is a great time for a recent graduate to consider buying a home,” Reid said.

The Rosedale Project, a large housing development under construction until recently, would have offered APU staff and students new housing options, but construction was halted, due to the weak housing market.

“The Rosedale Project has been affected, but it’s a good project, in a good location, and we hope the interest rate reduction will help,” Director of Azusa’s Economic and Community Development Department Bruce Coleman said.

Many communities have seen a rise in foreclosures, when homeowners can no longer make the payments on their mortgage, but Azusa has not been as strongly affected.

“It has been lesser of an issue in Azusa than Riverside and San Bernardino, because Azusa is closer to the Los Angeles Metropolitan region. It’s a very regionalized issue,” Coleman said.

The prospect of foreclosure is a horrible one for a homeowner to face. Once people lose a home, the chances of buying a home again, or even renting, are low.

“They are hard to get a hold of, as they have no forwarding address. Sometimes they don’t want to be reached, leaving in the middle of the night with bills, utilities and taxes unpaid, and creditors after them,” Peter Stamison said, a realtor in La Canada. “They often have to stay with friends or family.”

Clayton Jackson Harlan created “ForeclosureByOwner.org,” in an effort to help homeowners avoid the distress of having a home foreclosed by a bank. On his website, people can list and sell their homes themselves, thus making a profit.

“Losing a home creates personal financial distress and adds volatility to an already unstable economy,” the website states. That is why they want to help people sell their homes themselves.