4.5% interest rates?
December 5th, 2008
The Treasury Department has been considering subsidizing interest rates to stimulate housing sales. This is not a law, this is not a bill, at this point this is not really even a "plan". It is simply an idea that they are considering. If they do implement the plan, I hope they do it quickly. It is only being discussed for purchases, refinances would be ineligible.
On the flip side, the pure mentioning of the plan may hurt the market more as it may put buyers back on the fence. If you are considering to buy, don't miss out on the mid-5% rates being offered now! There is no guarantee that the Treasury Department's plan will come to fruition!
Andrea
update week of March 16th, 2009
Curtesy of Chris Washburn
MetLife Home Loans
The Federal Reserve made a BIG move to drive mortgage rates down to historic lows in an effort revive our housing market.
The Fed is planning to buy up to $300 billion long term government bonds and $750 billion in additional mortgage backed securities. And because mortgage interest rates are directly tied to mortgage backed securities this has produced a big drop in mortgage rates. We immediately noticed a .375% drop Wednesday afternoon.
HOWEVER, it is very important to understand that this is solely created by the government infusing money into the system (meaning this is artificially being created) and as soon as they run out or pull that funding rates will immediately climb back up to what is naturally determined by the market (higher). It won't last forever so don't wait.
There was also an interesting article in the Wall Street Journal today hinting to the fact that this is the lowest that rates may be. The last 3 times the Government stepped in and pushed rates lower we've seen the rates come to these levels and then slowly rise (Nov 25, Mid Jan and then Wednesday). Those who wait may be disappointed...
For more information, please contact Chris Washburn @ (301) 289-3100 X242 or email
As part of the Housing and Economic Recovery Act of 2008, FHA is changing their downpayment and maximum LTV requirements.
Summary of changes: - One standard downpayment requirement of 3.5% for all purchases
- Closing costs are in addition to the 3.5% down (6% seller contribution still allowed)
- New maximum LTV for all purchases is 96.50%
- The revised downpayment requirement takes effect with all new FHA case number assignments on or after January 1, 2009