Mortgage Rates To Go To Record Lows!

The Federal Reserve has began purchasing Mortgage-backed Securities from Fannie Mae and Freddie Mac. This has driven mortgage rates to record lows.  The 30-year fixed rate is projected to reach 4.5% by the beginning of 2009.

This could be your chance to take advantage of this unprecedented opportunity.

The U.S. Treasury Dept. is considering a plan proposed by the Financial Services Roundtable, an industry trade group, to purchase mortgage-backed securities from Fannie Mae and Freddie Mac in an attempt to restore confidence in mortgage-backed securities and encourage banks to make additional loans.
Under the plan, the Treasury Dept. would purchase 30-year, fixed-rate mortgages, which should restore confidence in mortgage-backed securities and encourage banks to make more loans.  As a result, banks could lower the rates on mortgage-backed securities, which could lower mortgage rates for consumers.The idea is to restore confidence in mortgage-backed securities, encouraging banks to make more loans, knowing that they will be able to sell them to the federal government. That should lower the rates on mortgage-backed securities and in turn mortgage rates.

Who will benefit from this plan?

The prime beneficiaries and the prime targets are home buyers. The whole idea is to provide low rates to more potential home buyers can qualify for loans.

Of course, California still has some of the highest-priced real estate in the country.  Many loans here go over the limit at which the government entities, Fannie and Freddie,  will purchase loans. Such jumbo loans are those over $729,750 until December 31st and then to $625,500 for 2009. These lower rates will not apply to such non-conforming loans.

Other beneficiaries are those who would like to refinance. Here in California, though, only those who do not owe more than their homes are worth or who, indeed, have significant equity in their homes will be able to take advantage of this boon.

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