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September 2019
« Sep    

Lowest Mortgage Rates Seen by Freddie Mac

Freddie Mac announced another record today for the lowest interest rates since they began recording mortgage interest rates in 1971. The 30-year fixed rate mortgage reported averages of 4.69% for the week ending June 24th. Fifteen-year fixed mortgage rates fell to a 4.13% average which was also slightly lower than the previous week. VA mortgage remain appealing to military vets because the record low VA rates are still available as well. If you already have a VA loan but need a lower interest rate, consider the VA streamline.

New and existing home sales showed declines in May, Nothaft pointed out. “Existing sales fell 2.2%, compared to the market consensus forecast of a 6% gain, based on figures published by the National Association of Realtors. Sales of new homes fell 32.7% to an annualized rate of 300,000 units, which was the largest monthly drop and slowest pace since records began in 1963, according to the Census Bureau,” he said.

Borrowers Reject Adjustable Rate Mortgage Loans

American homeowners have lost their appetite for once appealing adjustable rate mortgages. A quarterly report from Freddie Mac indicated that 97% of prime borrowers who refinanced adjustable rate mortgages last quarter chose fixed rate mortgage loans. In addition, 99.7% of homeowners who refinanced fixed-rate home loans last quarter chose fixed-rate mortgages again.

The number of homeowners choosing adjustable rate refinancing was significantly lower than the third quarter. “The very low interest rates for fixed-rate loans compared with ARM mortgage rates in the fourth quarter, combined with worries that rates may rise in the future when the economic recession ends, enticed refinancing borrowers to seek the security of long-term fixed-rate mortgages,” said Freddie Mac chief economist Frank Nothaft in a statement. “When borrowers can lock in a rate of 5% or less for 15 years or longer, it’s hard to find a reason not to take it.”

During the fourth quarter, initial interest rates on hybrid adjustable-rate mortgages were close to, or above mortgage interest rates on 15-year and 30-year fixed rate home mortgages. Last week, Freddie Mac reported the average 30 year fixed-rate mortgage had dropped to 5.04 %, down one full percentage point from where thirty-year mortgage loans were a year ago.

Mortgage Rate Trend Has Mortgage Brokers and Homebuyers Salivating

Lead generation gurus, Mortgage Lead Vault posted a recent article quoting Kelly Media Group President, and his optimism of a mortgage rebound helping to boost home sale and ultimately property values in 2009. Cardiff points out that the note worthy efforts from the mortgage players like the Fed, FHA and Freddie Mac to reduce interest rates for home mortgages while make credit more available for mortgage refinancing and new home-buying.

Freddie Mac Reports 30-Year Mortgage Rate Average at 4-1/2 Year Low

Freddie Mac said Thursday that the 30-year fixed-rate mortgage loan average declined from a week ago to a four-and-a-half year low as bond yields declined. The thirty-year fixed-rate average was 5.47% with an average 0.7 point for the week ending December 11th, down from 5.53% a week ago. Last year the average interest rate was 6.11%. The Current FHA mortgage rates dropped to 5.5% for the lowest FHA home loan rates in five years for 30 year home mortgages.

The thirty-year average has not been lower since March 25, 2004, when it averaged 5.4%, Freddie Mac said. “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-rate mortgage loans room to ease back a little further,” said Frank Nothaft, Freddie Mac chief economist, in a statement. Get the latest mortgage rate updates online.

Fed Wants U.S. to Play Role in Mortgage Loan Securities

Federal Reserve Chairman Ben Bernanke sketched out a blueprint for handling the mortgage-loan crisis which has become a key issue both presidential candidate. Speaking to a mortgage-finance symposium in Berkeley, Calif., by videoconference Friday, Mr. Bernanke said policy makers may need to maintain a key role in mortgage securitization regardless of the fate determined for government-sponsored entities Fannie Mae and Freddie Mac. Among the choices he outlined was creating a government bond insurer for mortgage funding. “Government likely has a role to play in supporting mortgage securitization, at least during periods of high financial stress,” Mr. Bernanke said.

The government on Sept. 7 seized Fannie and Freddie, which together own or guarantee half the nation’s mortgage loans, after months of uncertainty about their future. The government’s action initially alleviated some pressure on the market of loans for a mortgage refinance. But the financial crisis has pushed consumer mortgage rates up, weighing on the housing market. According to financial publisher HSH Associates the average for 30-year fixed-rate mortgage refinance loans conforming to Fannie and Freddie standards was 6.63%, , up from 6.34% in early September before the government put the firms into conservatorship.

According to former IHE home equity executive, Dan Ambrose, “the market for mortgage refinancing has been damaged in the wake of the foreclosure crisis and the lure of the low rate loan modification. The mortgage industry needs a lot more than the Federal Reserve dropping the interest rates a few times. Ambrose continued, “The housing sector desperately needs restored confidence and attractive mortgages with secure lending guidelines are essential.”

Government-sponsored lenders have been the only firms producing and selling mortgage-backed securities to investors during the recent credit crunch. “Their ability to continue to securitize when private firms could not did not appear to result from superior business models or management,” Mr. Bernanke said. “Instead, investors remained willing to accept GSE mortgage-backed securities because they continued to believe that the government stood behind them.” Having Fannie and Freddie compete as private firms — perhaps after breaking them into smaller units — would eliminate the conflict between private shareholders and public policy, diminish risks to the overall economy and financial system and allow them to be more innovative by operating with less political interference, Mr. Bernanke said. But “whether the GSE model is viable without at least implicit government support is an open question,” he said. Even under privatization, Mr. Bernanke said “it would seem advisable” to provide government support for the mortgage-securitization process during periods of turmoil. He cited FHA home loans as a great mortgage system. Bernanke may develop a government bond insurer, modeled on the Federal Deposit Insurance Corp., to provide government-backed insurance for bond financing to fund mortgage markets. As an alternative, Mr. Bernanke suggested covered bonds and debt issued by financial institutions and backed by a pool of high-quality assets with extensive regulation. Covered bonds have been used frequently in Europe as the focal point of home loan funding.

As a third option, he said the home loan firms could be tied even more closely to the government through a public-utility model or a cooperative between mortgage loan originators and the government-sponsored FHA mortgage firms. “A public-utility model might allow the enterprise to retain some of the flexibility and innovation associated with private-sector enterprises in which management is accountable to its shareholders,” Mr. Bernanke said. Mr. Bernanke’s comments came as the latest economic data showed a nation retrenching. Read the complete article by James R. Hagerty article.