30 Yr Fixed Conforming – 6%
15 Yr Fixed Conforming – 5.625%
30 Yr Fixed Jumbo 6.375%
5/1 LIBOR ARM – 6.375% (w/ 1pt)
7/1 LIBOR ARM – 5.875% (w/ 1 pt)
30 Yr FHA – 6%
Prime 5%
6 Month Libor – 3.12% Last week
6 Month Libor – 3.11% This week
Fannie and Freddie’s takeover by the government has calmed many fears in the minds of investors which funneled more funds into the bond market. This didn’t do much for jumbo products, as Fannie and Freddie don’t play in that game, but it lowered conforming loans a good bit. Even with a little rebound yesterday, we are about .375% lower this week on the 30 year than we were last week.
How long will the rates stay lower and will they get even better? Only time will tell. The government is not as efficient at running programs like the private sector (although Fannie and Freddie have been run terribly as a quasi private entity). My fear is low rates will be subsidized by taxpayer money for any spread between the jumbo rate and the conforming rate. I say this as the private sector runs the jumbo rate market so that is a basis I compare to.
Is it a good thing that F&F were taken over? From a global economic standpoint, yes. It provides stability for everyone. Is it going to ease the credit crunch? No. It is a move to eliminate the possibility of F&F going under.
Links:
http://money.cnn.com/2008/09/04/news/economy/workforce.ap/index.htm?postversion=2008090409
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