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Mortgage Rates Down – New Fed Program Means Opportunity for Refinancing and Home Buyers
26th November 2008
Over the last month, mortgage rates have been stuck in a narrow range. All the news coming out about the economy was consistently bad, which is usually 
good news for lower mortgage rates, but the bond market was stuck and rates didn’t budge. A big part of the problem has been lack of investor confidence, even though Fannie Mae and Freddie Mac are now fully backed by the government. Over the last months since the credit crisis hit, the Fed and the Treasury have been trying to get mortgage rates down. In order for the economy to recover, housing has to recover and lower rates are a big part of the solution. But even as the Fed lowered short term rates all the way down to 1%, the mortgage market wouldn’t bite and the spread between mortgages and short term rates hit an all time high. The good news is that this changed yesterday.
The Fed announced yesterday that they will buy up $600 billion worth of mortgage backed securities from Fannie and Freddie. This announcement triggered a huge rally in the mortgage backed securities market, and mortgage rates dropped yesterday to their lowest point in the last year. We’ve seen similar moves two other times this year, and both times the low rates were only around for a short time before disappearing. Yesterday the best rates were earlier in the morning, then the market pulled back and lenders re-priced for the worse. Still rates are much better than they have been in some time. I expect we will see a lot of volatility, but there is reason to believe that rates will stay lower this time. Maybe.
This is great news if are in the market for a new home, or if you could lower your bills by refinancing your mortgage, you. Lower rates mean lower payments, and extra money in your wallet now is a very good thing. If you would like to check on the current rates for your personal situation, let me know.
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January 14th, 2009 at 11:56 pm
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