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4% Mortgage Rates - Don't Hold Your Breath!

For those of you that hear that mortgage rates will be dropping again and turned down a 5.5% rate, please read this - Special Report -

02/06/2009

The number one topic of conversation among borrowers and loan officers right now is: We hear that the government is working on a program that will make rates 4%. Is this true and should I wait to lock in my loan?

The constant barrage of media coverage on this topic has only made it even more confusing for consumers.

So what is going on?

We have called our inside sources and our Washington D.C. contacts and have confirmed the following:

•1) There are no provisions in the proposed stimulus bill that addresses mortgage rates

•2) There is no official plan that has been put forth by the Obama administration or by any other government agency that addresses mortgage rates.

Talks have been started with the Federal Reserve and the Treasury to discuss the possibility of potential further purchases of GSE mortgage backed securities in an effort to artificially stimulate demand for the MBSs which may temporarily help rates.

Some talks...and I repeat the word SOME...involve purchasing large blocks of the 30 year fixed 4.00% coupon. This of course does not mean that 30 year fixed rates will be 4.00%. Currently 4.5% Coupons are being purchased and 30 year fixed rates are closer to 5.25%.

Also, the current plan that we are in the middle of ($500 Billion MBS purchases) hasn't been executed in a way that would maximize the affect and cause any meaningful reduction in rates.

The bottom line is there is no official (or unofficial) plan to make rates 4% at this point in time. And there is no silver bullet that can be used to make rates instantly lower.

Also any further action to purchase additional mortgage backed securities (if it ever occurs) may be negated by other potential legislation such as a Foreclosure Moratorium or a Federal Bankruptcy Cram Down.

You may print this out and give to your consumers.

Bryan S. McNee
Sr. Bond Analyst
MBSRateWatch.com
2401 Regency Road
Suite 302A
Lexington, KY 40503
800-264-7135

Posted by Angelo Cusinato |CRMS, CMC|Mortgage Specialist on 02/06/2009 03:51 PM

Comments (7)

Mortgage in the ActiveRain Channel

lower mortgage rates, opportunity lost, future of mortgage rates

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7 Comments on 4% Mortgage Rates - Don't Hold Your Breath!

FEB

Thanks for the heads up. Rumors do fly fsat a furious. Again thanks for the heads up.

Angelo,

The Senate voted down Senator Ensign's housing stimulus proposal yesterday. The proposal contained a plan to fix mortgage interest rates at 4% for a period of time. I'm still trying to figure out what was in the bill that the Democrats didn't agree with, if you find out let me know.

Troy

Where were all these ideas when the Republicans had more power?

Angleo,

I think it is imperative that we continue to write and email our Senators, in support of assisting Homeowners' out in this desperate time. If our esteemed politicians hear from the voters that they are not satisfied with the proposed legislature maybe~just maybe they may respond.

Please email or write your local politicians to support the proposed "Housing Stimulus Proposal"

We can make a difference....

Laura, No question that we should be giving the politicians our two cents. If only the crooks would limit their giving to two cents instead of millions to protect their vested interest. If FNMA was spelled ENRON, would someone be going to JAIL?

we shall see !!!! time will tell...somethings got to give!

FEB

Thanks for the insightful info. It will be interesting to see how everything pans out during the rest of 09'.

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