We’ve had a “perfect storm” of good news for homeowners. First, rates declined again. We’re not quite at the lowest levels ever, but we are very close to them. This has been primarily for two reasons. First, turmoil in Europe continues. With the Greek debt crisis resolved (at least for the time being), the next wavering state is Spain. As foreign bonds look less attractive to investors, US bonds look more attractive. More demand enables the US to drop the price on our bonds. Banks borrower money for less and rates go down. The second factor keeping rates low are comments from the Fed about their analysis of our economy.
In his January 25th, 2012 article, “Fed: Interest Rates Should Stay Low Until Late 2014,” quoted in the San Jose Mercury News, Martin Crutsinger writes that, “The Federal Reserve signaled. . . that a full economic recovery could take nearly three more years, and it went further than ever to assure consumers. . . that they will be able to borrow cheaply well into the future.”
Combine these economic factors with some brilliantly enhanced programs from Fannie Mae and Freddie Mac. The Fannie Mae DU Refi Plus and Freddie Mac LP Open Access Programs enable homeowners who are underwater to refinance to a lower rate and payment. The program used to have limits to how far underwater one could be. However, that guideline has been lifted, and borrowers can now refinance up to an unlimited loan to value ratio. The Government vis a vis Fannie and Freddie is putting its money where its mouth is and helping those who are current on their payments to get into more sustainable home loans.
It’s a great time to look to borrow money: so please, keep us busy and give us a call with questions!