As I Predicted a Few Days Ago.... Rates Going to About 4.5% for a 30 Year Fixed.  The question is - will that be low enough - given all the other factors that I mentioned in my blog post.....

I stated:

"I expect they will have to go into the 4's or less.... to counter the glut of foreclosures and tighter lending standards.  So - if you are a buyer - now is probably the best time to buy in the history of the US.  (You just have to have good credit, a job (fancy that), and a nice downpayment now...)  But - Many people who had short sales or foreclosures will be out of the market for a number of years....unable to buy.  Also - though lower rates can help borrowers seeking to refinance - many of those may have been "no doc" in the first place - and they won't have an opportunity to do a "no doc" refinance.  So - they are stuck with the loans they have."

The scoop --

The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said this evening (Dec 3).

The plan would see mortgage finance companies Fannie Mae and Freddie Mac expand their purchase of mortgage securities to help drive down borrowing costs.  The 4.5 percent target interest rate is roughly one percentage point lower than the average rate currently on a 30-year, fixed rate mortgage.

Both the mortgage giants, which finance or guarantee about half of all U.S. mortgages were effectively nationalized by regulators in September after losses on mortgages eroded their capital.

The announcement by the Fed last week helped to lower home mortgage rates by about a half-percentage point and sparked a jump in refinancings.  However -- I put out a release to my past clients telling them that they may want to hold off on that (though ultimately - it was their call of course) - as I expected rates in the 4's within a month or two.  I was right....(& thus saved my past clients from having to do another refinance again soon after - saving them several thousands in fees tacked to their principal balance...)