Secretary Treasurer Paulson is considering yet another plan to boost the ailing housing markets. The treasury has already announced a plan to buy Mortgage Backed Securities issued by Fannie Mae and Freddie Mac and now wants to step up those purchases in a coordinated move to drive home loan rates down to 4.5%. While the details will need to be ironed out....Be careful what you wish for--just talk of this might stop potential buyers in their tracks from purchasing a home now, as they will want to wait in the hopes of lower rates. Additionally, it is very difficult to set a target interest rate on home mortgages, which will ultimately and always be driven by inflation. Home prices are at record lows!! And interest rates are still very attractive in the Mid 5% range. Get your clients off the sidelines and remind them that they can always refinance if rates do drop to the mid 4% range-BUT at that time-home prices are sure to rise. So, the bottom line is-Grab the deals now!!!
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