As you may have read in the paper or seen on TV, the United States Treasury has taken a major step toward resolving the financial crisis by buying large quantities of mortgage backed securities (MBSs) from lending institutions. This creates a sense of demand for the MBSs and in turn drives up their value. Mortgage interest rates work in reverse of the value of MBSs. So – when MBSs are valuable, mortgage rates tend to fall. This is exactly what we are experiencing right now. As of 12/16/08, our 30 year fixed is at 4.875% and our 15 year fixed is at 4.75%. Historically, these are some of the lowest mortgage rates we’ve ever seen.
We have even heard talk recently of the Treasury creating a program that will provide incentive for banks to offer loans to consumers at 4.5%. As of now, this program is slated to be available only to those purchasing homes and not refinancing. The funds aren’t currently available and many people believe they won’t be until after President-Elect Obama takes office.
For those who recently purchased a home, you are eligible for a refinance after 90 days.
Monday, December 22, 2008
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