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31 Dec 08 Mortgage Rates Decline to Lowest Level

According to Freddie Mac chief economist Frank Nothaft, “Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all-time record low since Freddie Mac’s survey began in April 1971.”  FHA rates declined to 5.25% this week and many believe will promote new opportunities in 2009 for first time homebuyers.  Second mortgage rates declined for fixed equity loans and home equity lines of credit.  Home mortgage rates have dropped dramatically ever since the Federal Reserve unveiled a plan last month to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises, Fannie Mae, Freddie Mac, and Ginnie Mae. The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

Interest rates on U.S. thirty-year mortgage loans with fixed interest rates dropped for a ninth consecutive week, reaching their lowest level in 37 years, according to a survey released on Wednesday by home funding company Freddie Mac.  Mortgage rates for 30-year fixed-rate mortgage dropped to an average of 5.10 percent for the week ending Wednesday, down from the previous week’s 5.14 percent, Freddie Mac said.  The 30-year fixed-rate mortgage has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

Many industry insiders believe that mortgage interest rates will decline to even lower levels in 2009.   Internet advertising firm, KMG president, Jason Cardiff said in a statement yesterday, “Rates for home mortgages will decline to unimaginable levels in 2009, because the American people need an incentive to start taking risks again in buying real estate.”  Cardiff continued, “the banks need to trust restored as well and the only motivating reason for consumers to start borrowing again will be low mortgage rates.”  Cardiff pointed out that low rate mortgage loans for targeted groups are not enough. “The banks need to expand their lending guidelines so that not only people with high credit scores have the opportunity to refinance into a mortgage they can afford.”

The Federal Reserve continued their aggressive actions with an effort to drive down home loan costs, setting a goal of buying $500 billion in mortgage-backed securities by mid-2009.  The struggling housing market is essential to the U.S. economy.  Many economists believe improving the housing market with low rate incentives will stimulate a recovery for the world’s largest economy, which admitted to being in a recession since last year.  The housing market is in the worst downturn since the Great Depression as a huge supply of unsold homes, tighter mortgage lending guidelines and record foreclosures push down home prices.

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12 Dec 08 Mortgage Rates Drop to 4.5 Year Low

Mortgage interest rates dropped again this week, following the government’s efforts to assist the troubled housing market.  Government sponsored mortgage lender Freddie Mac said Thursday that fixed rates on 30-year mortgages averaged 5.47% for the week ending Dec. 11. That’s down from 5.53% last week and well below 6.11%, which is where the rate stood at this time last year.  Mortgage interest rates began to fall after November 25th, when the administration announced that it would throw another $800 billion into the financial markets to unfreeze consumer credit and mortgage lending.

Specifically, mortgage rates responded to the Federal Reserve’s announcement that it would purchase up to $500 billion in mortgage loan securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. It will also buy another $100 billion in direct debt issued by those firms.  Mortgage refinancing rates dipped to 5.77% on a 30-year, fixed rate loan the day after the government’s announcement, down from the previous Monday’s 6.06% average, according to Keith Gumbinger, vice president of HSH Associates. And the downward trend has persisted.  “What we’re seeing is a slight continued decline influenced by the Federal Reserve’s announcement to buy half a trillion in mortgage backed securities,” Gumbinger said. “And this continued minor downdraft is also due to the poor economic climate.”

The thirty-year mortgage rate has not been this low since March 25th, 2004 when it averaged 5.40%.  “Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a release on Thursday.  FHA home loan rates declined as well, so more homeowners should now be able to qualify for a refinance loan that features interest rates fixed in the 5% range.

The fifteen year fixed rate mortgage this week averaged 5.20%, which is down from 5.33% last week. A year ago at this time, a 15-year fixed rate loan averaged 5.78%.   The 15-year rate has not been this low since February 7, 2008, when it averaged 5.15%.  Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.82% this week, up from last week when it averaged 5.77%. At this time a year ago, the 5-year ARM averaged 5.89%.

According to the Mortgage Bankers Association, the one-year Treasury-indexed ARM averaged 5.09% this week, up from last week when it averaged 5.02%. Last year, the 1-year ARM averaged 5.50 percent.  “The housing market still hangs in the balance,” Nothaft said in a release. “On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0% in October, based on figures from the National Association of Realtors. Meanwhile, conventional mortgage loan applications for home purchases over the week ending December 5th were up 2.0% from four weeks prior, but were still 51% below the same period last year.” Get informed when the interest rates change and get the most updated mortgage rate news online.

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