Mortgage Rates Drop Sharply After Bailout Plan, It's Time To get Your Mortgage Loan!!

Sept. 10, 2008 - PRLog -- For More Information Contact
Donald Troisi
Regional Sales Director
Ameriave Mortgage Corp
352 597 6296
http://www.amerisave.com/partner/dtroisi
 
Sunday's announcement that the government would intervene in the troubled lending giants sent long-term mortgage rates plunging.

The average rate on a 30-year, fixed-rate mortgage has fallen to 5.88 percent, down from 6.26 percent last week, according to Bankrate. The average rate on a 15-year loan fell to 5.49 percent, down from 5.77 percent during the week prior. For the mortgage market, that represents a huge drop, virtually overnight.

“I’ve seen a drop like this happen maybe two or three times in my 17 years in the business,” said Bob Walters, chief economist at Quicken Loans. “That’s an extraordinary rate drop.”

He said the Detroit-based company logged its busiest day of the year Monday in terms of combined new loan and refinancing applications.

Mortgage rates fell because the government stepped in to guarantee billions of dollars in outstanding mortgage-backed securities issued by Fannie and Freddie, making them instantly more desirable to investors.

As investors bid up the price of mortgage-backed securities, that sent interest rates tumbling, with the average 30-year fixed rate falling below 6 percent for the first time since January, when rates stayed down only briefly.

This time, lenders say, rates are likely to stay low for much longer — good for homeowners, prospective buyers and the troubled real estate industry.

“When you see rates go down nearly half a point in one day, people notice,” said Joey Hansen, a mortgage broker in Apex, N.C. “I think we’ve entered a new world. The confidence restored in world markets will last for awhile.”

Of course, sharply lower mortgage rates are hardly a cure-all for the housing market. Delinquency and foreclosure rates are still rising as consumers are unable to keep up with payments due on easy-money mortgages written at the height of the bubble. The housing market is already glutted with homes that have been repossessed by lenders, and so prices in many markets are still heading lower.

But for buyers or homeowners who want to refinance, the lower rates are good news, and brokers are hoping for a wave of new business.

“A lot of people missed out on these rates the first time,” said Peter Thompson, senior loan officer at Professional Mortgage Partners in Downers Grove, Ill., referring to the brief rate drop early in 2008. He believes 30-year mortgages are likely to remain below 6 percent for the rest of the year.

But other brokers note that, while the newly lowered rates could last for a few months, they won’t stay below 6 percent forever and could climb back up to about 6.5 percent over the next year.

Joe Metzler, a senior mortgage broker at the Metzler Mortgage Group at St. Paul, Minn.-based Mortgages Unlimited, says that he’s seen only a slight uptick in customer contact since the news about Fannie and Freddie broke, and the calls he has gotten are coming mostly from clients already shopping for a mortgage but who hadn’t yet locked in rates.

Metzler said he was burned in January when 30-year rates dropped to about 5.8 percent: He hastily organized a postcard mailing to 15,000 former and potential clients, but within days the average rate was back to 6.3 percent. By the time clients got the postcards and called about the low rates, he was unable to offer them, he said.
 
“Yesterday I was reluctant to do that again,” he says.

He thinks rates have fallen this week as a "knee-jerk" response to the federal intervention and could help boost the housing market before going up again.

“Rates can’t live there forever,” Metzler says. “I’d tell anyone who thinks rates below 6.5 percent are a good deal to lock them in now."

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Amerisave is one of the nation's leading and fastest-growing online mortgage companies, serving customers in all 50 states.
Regional Sales Director Donald Troisi, can provide can assist you with all your home financing needs.
dtroisi1@tampabay.rr.com