Stan Suther's Real Estate and Stuff

The consensus of the experts is that our current economic turmoil will not be resolved until the price of housing is stable.  So, the federal government is working on a number of ways to make that happen.  The latest, and most direct effort is coming from the Federal Reserve.  They’ve announced that they will be buying mortgage backed securities from lenders, and that  will likely lower the rates on mortgages because they will be taking on the risk.  Here is a brief explanation from Lawrence Yun, Chief Economist of the National Association of Realtors.

“Federal Reserve Buying Mortgages

• Federal Reserve’s role is to conduct monetary policy and be the lender of last resort. The Fed’s job was never viewed as taking on a credit risk – where some loans may go sour.
• By buying mortgages directly, it can lower rates on 30-year fixed rate mortgages. By contrast, the cut in the short-term fed funds rate have not and generally do not lower long-term mortgage rates.
• Given the unprecedented financial market squeeze and the potential collateral damage to the economy from the fallout in the housing market, this action to buy mortgages directly should be applauded for attacking the problem at its source. There will be no economic recovery without home price stabilization. Furthermore, prices will not stabilize until more buyers enter the market to absorb the housing inventory. History has shown that lower rates, even during a recession, raise home sales.”

This is already having a positive effect.  According to Kim Peschock, our local CENTURY 21 Mortgage rep., as of yesterday afternoon, conventional 30 year mortgage rates had dropped to 5.25%-5.75%, and FHA/VA fixed rates were at 5.5%-6.0%.  These are for mid-range credit ratings.  Actual rates will always be specific to your situation regardless of advertised rates, so it’s good to talk to a lender to find out  what rate you would get.  If you’d like more information about how this can benefit you, call Kim at (704) 500-9087.  She’s been in the mortgage business for 20 years, and knows how to put together a mortgage that is in the best interests of you, the home buyer.

It’ll be interesting to see how the rates adjust next week.  With this announcement, and with the announcement of the Obama’s cabinet, hopefully we’ll be entering a more stable environment that will raise eveyone’s confidence in coming out off this.  The stock market doesn’t like uncertainty, so these moves may improve that outlook, also.