Monday, March 23, 2009

Mortgage Rates May Fall to WWII Low on Fed Purchases

posted by SooYeon(Pia), Shin

March 19 (Bloomberg) -- U.S. mortgage rates may fall to the lowest since World War II on the Federal Reserve’s plan to buy up to $300 billion of Treasuries and increase purchases of mortgage-backed bonds.
Rates for 30-year fixed home loans dropped to 4.98 percent this week,
Freddie Mac said today. They may reach 4.5 percent as the Fed’s purchases progress, said Mike Larson, real estate analyst at Weiss Research in Jupiter, Florida.
“It’s a big bullet the Fed’s firing here,” he said. “The Fed is kind of going all in.”
U.S. central bankers said yesterday they will buy up to an additional $750 billion of mortgage-backed securities from Fannie Mae, Freddie Mac and Ginnie Mae to support home lending. The Fed is trying to lower rates by reducing the supply of outstanding mortgage bonds, boosting their price and lowering yields. That would allow banks to reduce the rates on new mortgages and still sell mortgage securities at a profit.
The Fed announced a program in November to buy $500 billion of mortgage-backed securities guaranteed by
Fannie, Freddie and Ginnie Mae. That helped drive 30-year fixed mortgage rates down to 4.96 percent during the week ended Jan. 15, the lowest since Freddie Mac began keeping track in 1971.

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1 comment:

  1. Advice for First Time Buyers

    A number of factors have led to the number of first time buyers purchasing property falling over the past year, and these factors include lack of mortgages, the effects of the global credit crunch, and falling property prices.

    You need to bear in mind that there are many different upfront fees that you may have to pay out when taking out a mortgage, such as solicitor fees, mortgage arrangement fees, and a hefty deposit, and in order to work out whether you can even afford to take out the mortgage you need to determine whether you have the necessary funds available for the upfront payments. It is important to go through your income and outgoings thoroughly to ensure that you can comfortably afford the monthly repayments on the mortgages, as you could otherwise lose the property if you fall into arrears.

    Also, as first time buyers you need to bear in mind that it is not just the mortgage repayment that you have to factor into your budget. You will also need to ensure that you can afford to pay bills, pay for groceries, and cover other costs.