The Return of the Mortgage Rates
What caused the stock market to propel upward today in the face of
horrendous global and national economic news? CNBC says it's the
Treasury's new plan to stabilize the housing markets by lowering
lending rates and pushing the banks to lend at these rates, and the
uptick in refinance applications. Here's today's news on mortgages that
moved the market from a bleak 200 point Dow loss to a 170 point gain:
Treasury Eyes Plan to Lift Home Sales
--------
Treasury Eyes Plan to Lift Home Sales
The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full percentage point lower than prevailing rates for a standard 30-year fixed-rate mortgage.Pimco's Gross says 30-year mortgage rates may fall to 4.5% - Bill Gross called this before the Treasury press release.
--------
The government keeps trying to pull every trick they can to save this economy. I really think they should let the market work it out.
I beleive the lower interest rates will get some of the fence sitters off and buy something. May help the real estate marlket recover a little sooner. They just don't get that the market needs to adjust after such a big run up.
They just keep doing their best to turn our country into a socialist one.
Reply to this
I'm right with Jeff on this one. We have to realize why values went up so much to begin with in the first place.
Let's not forget the 3 Million + people that now can't buy for several years due to being foreclosed on or doing a short sale to divorce their mortgage or a BK... (not exactly sure what those numbers are for just this year and I could not find out with a quick search.)
Can you still get a loan with no income?? We have to consider all of the people that have been laid off also...
The potential buyer pool is dropping every day... no matter what the rates are and the amount of money made available to lend are.
Perhaps the solution is to go back to lending standards that we saw in 2005?
No income, No job, no assets and heck.. let's not even do a credit check to get things rolling again and pump those values back up...
Reply to this
LOL
Reply to this
Hilarious! Seeing the folly confirms the fact that moral hazard - ensuring that boondoggles don't happen - won't reappear again in the form of disposable credit. Now, which bank account did our billions of bailout money go into?
Reply to this
I too found this story particularly interesting today. I agree with the previous commentorsthat we will be better off in the long run if we get the government out of the business of supporting artificially low mortgage rates. Still I think this plan could have some significant near term implications, while not fundamentally changing a thing. I wrote more about that on my blog a few minutes ago: http://www.foreclosuretruth.com.
Reply to this
Pat, I am beginning to think the country might have been better off with Government creating their own mortgage office and giving everyone 4% notes. Let the mortgage companies and banks service them. I suspect it would have saved billions.
This from a free market guy.
Reply to this
Funny.. I've been thinking the same thing until I talked to an executive for a regional style bank that's financially solid. Of course.. they never got involved in the sub-prime fiasco to begin with.
Reply to this