MORTGAGE RATES AT 37 YEAR LOW

From the desk of:

Rich Storey
Mortgage Advisor
615.260.8028

Credited to: www.WashingtonPost.com


30-Year Loan Rates at 37-Year Low
By Alan ZibelAssociated Press Saturday, December 20, 2008; Page F04

Rates on 30-year, fixed mortgages dropped this week to their lowest levels in at least 37 years as the Federal Reserve pledged to pour money into the mortgage market to spur the moribund U.S. housing sector.

Freddie Mac reported Thursday that average rates on 30-year, fixed-rate mortgages dropped to 5.19 percent from the year's previous low of 5.47 percent, set last week.
The rate is the lowest since Freddie Mac's weekly mortgage rate survey began, in April 1971.
Mortgage rates started falling after the Federal Reserve launched a sweeping effort in late November to aid the U.S. housing market by buying up to $600 billion of mortgage-related securities and other debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Other gauges of rates also showed them falling through the week.

It was the best news in months for anyone looking to lock in a 30-year, fixed-rate mortgage. But it was not expected to be a cure-all, and borrowers already in danger of foreclosure probably won't be able to take advantage because only borrowers with stellar credit can qualify.
"It's a call to action for homeowners looking to get out of adjustable-rate mortgages," said Greg McBride, senior financial analyst at Bankrate.com. "Unfortunately, it's not an equal-opportunity party."

Faced with a surge in defaults, Freddie Mac and its sibling company, Fannie Mae, are stepping up efforts to prevent foreclosures.
The federal agency that regulates the two companies anticipates that they will modify about 75,000 troubled loans next year, up from about 60,000 this year. The program applies only to borrowers who have missed three months of payments, have not filed for bankruptcy and still live in their homes.

Most of the increase is expected to result from a mass loan-modification program for loans owned by Fannie Mae or Freddie Mac that was launched this week. Loan servicing companies, which collect mortgage payments for Fannie and Freddie, are expected to send out thousands of letters to eligible borrowers in the coming weeks.

Borrowers who are current on their mortgages can take advantage of lower interest rates and refinance to save money.

The average rate on 15-year, fixed-rate mortgages dropped to 4.92 percent from 5.2 percent last week, Freddie Mac said.
Rates on five-year, adjustable-rate mortgages fell to 5.6 percent from 5.82 percent. Rates on one-year, adjustable-rate mortgages dropped to 4.94 percent from 5.09 percent.

The rates do not include add-on fees known as points. The nationwide average fee for 30-year and 15-year mortgages was 0.7 point last week. Fees on five-year, adjustable-rate mortgages averaged 0.6 point, while fees on one-year adjustable-rate mortgages averaged 0.5 point.
The Federal Reserve, aiming to free up lending and jolt the economy, on Tuesday cut the federal funds rate from 1 percent to a target range of zero to 0.25 percent and pledged to keep funneling money into the market for mortgage investments.