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Will mortgage rates drop again?

December 31st, 2008 9:51 AM by Lehel Szucs

Will mortgage rates drop again?
Will the latest nugget of news about the Federal Reserve's plan to buy mortgage bonds send home-loan rates plummeting again?
Borrowers and analysts will be closely watching quotes from lenders Wednesday, especially because another key mortgage player is predicting a sharp decline.
The Fed said late today that it would begin purchasing $500 billion in Fannie Mae, Freddie Mac and Ginnie Mae securities early next month.
When the Fed initially announced that plan in November, and when it reaffirmed it two weeks ago, rates promptly plunged -- although only for solid, creditworthy borrowers with big down payments or lots of equity in their homes. These borrowers discovered recently that they could get 30-year fixed mortgages in the 4.5% range.
They have since edged back up to just under 5% for solid borrowers who pay a 1% upfront fee and shoulder about $3,000 in closing costs, mortgage brokers said.
There was not much movement in rates from that level today. But as bankrate.com's Greg McBride points out, the Fed spoke today "after market close, so we might see some reaction to that tomorrow."
More encouraging words: Separately today, Federal Housing Finance Agency Director James Lockhart, the regulatory supervisor of Fannie Mae and Freddie Mac -- said on CNBC that he expects mortgage rates to fall again by a half percentage point to a whole point.
Posted in:General
Posted by Lehel Szucs on December 31st, 2008 9:51 AM

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