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Mortgage rates to drop to 4.5%...

17K views 308 replies 82 participants last post by  scooooter7 
#1 ·
There is a big push right now to lower the 30 fixed rate on FHA, Fannie and Freddie loans to 4.5%. Today we are at 5.375% so lowering it by a full point would be great.

"Treasury may set mortgage rates at 4.5% to boost sales

By Ronald D. Orol, MarketWatch
Last update: 5:21 p.m. EST Dec. 3, 2008
(MarketWatch) - The Treasury Department is contemplating a proposal that would cut mortgage rates for new loans for homes, according to the Wall Street Journal.

The plan would employ Fannie Mae and Freddie Mac to offer mortgages with rates as low as 4.5%, roughly 1% lower than current rates.
The measure is under consideration as part of the Treasury Department's continued effort to limit foreclosures, which has been at the core of the financial crisis. The plan would seek to revitalize the financial market without bailing out homeowners and lenders, the Journal reported.

As part of the proposal under consideration, Treasury would buy mortgage securities backed by Fannie Mae and Freddie Mac, in addition to those guaranteed by the Federal Housing Administration.
Fannie Mae and Freddie Mac guarantee a significant chunk of all new mortgages in the United States.

It's unclear whether the proposal would create refinancing opportunities, which analysts said would be even more positive for the beleagured housing industry and battered home buyers.

Conrad DeQuadros, an economist at RDQ Economics in New York, said lower mortgage rates should provide some support to the housing market by allowing cheaper financing to new buyers with solid credit profiles to the housing market. But he added that a greater impact would be felt if the proposal also permitted refinancing opportunities. However, he also expressed some skepticism about the extent of the impact.
"There is still a massive supply of homes on the market and consequent expectations of further declines in home prices may still keep buyers away," DeQuadros said. "In addition, the weakness in the labor market appears to be intensifying and rising unemployment will depress housing demand and increase delinquencies. As with all of the Fed and Treasury programs, any new plan will have to be given time to work before judgment on its effectiveness can be made."

Charles Horn, partner at Mayer Brown LLP in Washington, said he believes this program may be part of Treasury Secretary Henry Paulson's plan to expand a program announced Nov. 25 that would use $20 billion of a $700 billion government market stabilization fund to back a consumer lending facility run by the Federal Reserve Bank of New York.
That plan would seek to provide liquidity to consumer loans such as student loans and credit cards. Paulson said Dec. 1 that he may expand it to other asset classes. "They hope making funds available to offer lower-cost mortgage financing will have a stimulating effect on the mortgage market by getting people to buy homes," said Horn.
He added that Paulson may be waiting to see how receptive the program might be with key lawmakers such as House Financial Services Committee Chairman Barney Frank, D-Mass., and Senate Banking Committee Chairman Christopher Dodd, D-Conn., before moving ahead with it. Horn added that Paulson is likely seeking the consideration of other key constituencies such as incoming Treasury Secretary Timothy Geithner. "
 
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#4 ·
I'd refi both houses in a heartbeat if it went that low.
 
#14 ·
What is the kind of standard rule on refi? I am at 5.25 and 5.625 fixed on two houses. Have an investment property at I think 6.25. All fixed and 30 years.

If you can drop it a point it becomes advantageous to you? I can't remember but know there are enough on here to set me straight.....
4.25% and lower gas prices??? I'm thinking "too good to be true"...taxes are going up.
 
#24 ·
with what part... the low down paymet or low interest rate? IF its the rate question, As long as you can fit into the debt to income ratio set by the lender with both homes you should be OK. Do you have 1 other home or multipule investment properties?
 
#27 ·
NEW YORK (CNNMoney.com) –– Lobbyists are pushing the Treasury Department to consider a plan to purchase mortgage-backed securities in the hopes of driving mortgage rates to as low as 4.5%, an industry source said.

Similar to an effort unveiled last week by the Federal Reserve, the proposal calls for Treasury to buy securities backed by 30-year fixed-rate mortgages from Fannie Mae and Freddie Mac. Details on the plan remain sketchy, but an announcement could come as early as next week, the source said.

The increased demand for mortgage-backed securities would prompt mortgage rates to drop. That, in turn, would enable homeowners to refinance into lower-cost loans and make it cheaper for potential homebuyers to get into the market.

Spokeswomen from Treasury and the Federal Housing Finance Agency declined to comment.

Last week's Fed move drove mortgage rates down to 5.5%, from 6.06% a week earlier. The Fed said on Nov. 26 that it would purchase up to $500 billion in mortgage-backed securities from Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500) and Ginnie Mae, and that it would buy another $100 billion in direct debt issued by those firms.

Mortgage applications more than doubled as a result, the Mortgage Bankers Association said Wednesday. Much of the activity stemmed from homeowners looking to refinance.

Industry groups have been pressuring President-elect Barack Obama and lawmakers to lend a helping hand to the housing market. The National Association of Realtors, for instance, has called for Treasury to buy mortgage-backed securities. Meanwhile, a coalition of industry groups have banded together under the "Fix Housing First" banner to call for measures including tax credits of up to $22,000 and the creation of a 30-year mortgage, carrying rates as low as 2.99%.
Experts see both pros and cons

Experts, however, had mixed views on how much a new Treasury initiative would help homeowners and the economy. Some felt lower rates would help stabilize the housing market by bringing in new buyers and would give those who refinance more money to spend.

"If it gets people buying homes and spending, it will help reverse the economy and get us out of this recession," said Scott Talbot, senior vice president of the Financial Services Roundtable, which is pushing the measure.

While it takes time to entice new buyers into the market, low rates accelerate that process, said Greg McBride, senior financial analyst at Bankrate.com.

"It is clearly designed to bring buyers into the marketplace and soak the inventory of unsold homes," he said.

But others questioned whether rates would remain low and, even if they did, only a narrow slice of credit-worthy borrowers would benefit.

Rates are already inching up, hitting 5.75% on Wednesday, said Keith Gumbinger, vice president of HSH Associates. Several government attempts to lower mortgage rates this year have failed to have a lasting effect.

Also, the proposal would do little to help troubled borrowers who have fallen behind on their payments, have no equity in their homes or have lost their jobs. With credit standards still high, these homeowners would not be able to refinance and take advantage of the lower rates, he said.

Finally, super-low rates could keep private investors out of the mortgage-backed securities market, forcing the government to remain the primary buyer of such investments, Gumbinger said. Rates have not fallen below 5.37% in more than 45 years.

"I can't imagine there will be a significantly active marketplace of people who want to buy at these low rates," he said. To top of page
 
#28 ·
I just got into my house and have not made a payment yet. My loan is at 6%. My lendor told me my FHA is insured (I pay PMI) so I could streamline if rates went lower. I just checked and according to my math I would pay $225 less per month, that is a hearty chunk!

Anyone know what the general cost to streamline is?
 
#32 ·
We just want a house,
Went looking a few weeks ago and people are still wanting
$200-$300 per sqft.
Crazy............
Many of these homes sold for less then $100 per sqft in 2003.
They say the desert area has its own bubble, but there is many homes for sale???

Went and looked at one built in 1989 and sold for 250k in 2002 and now want 525k.
They say they are desperate to sell???
I only look at ones with r.v. parking.
Hopefully prices will come down, but who knows?


Johnny
 
#35 ·
Just wait it out until you are not upside-down. (?)
 
#43 ·
Interest Rate of 4.5%

This interest rate that is now being kicked around by the Feds is for "new loans" only. At the present time it does not and will not include refi's..that could change with enough pissed off people, but that is how it stands now..
 
#47 ·
I have always been told that your mortgage payment should equal 1 weeks pay. . .simple terms for this southern boy. From those of you that are in the loan business what do you say to this formula? To conservative, about right, to much?

Thanks.
 
#58 ·
Even if it does drop to 4.5% those loans will only be for people that are behind on their loans looking at possible foreclosure. The people that have been making their payment and on time get SCREWED AGAIN !! You would thing that this would be a form discrimination. :mad:
 
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