So over the past day or so I’ve been hearing a flurry of chatter about the possibility of mortgage rates dropping down to 4.5%- a really amazingly low rate. So is it going to happen?
There are quite a few blogs and articles around right now and most seem to agree that this unprecedented drop is one of the options currently on the table for Bernake and the Treasure Dept. The AP reports that under the plan “Treasury would seek to lower the rate on a 30-year mortgages to 4.5 percent by purchasing mortgage-backed securities from Fannie Mae and Freddie Mac.”
Getting mortgage rates down is great for my business but I’m not convinced it would even begin to stop the underlying problem of foreclosures. Particularly because this 4.5% rate would only be available for new purchases, not for refinancing. An article in the LA Times and another at CNNmoney.com seem to agree. CNNmoney argues that “adjusting mortgage rates, however, will only go so far in getting prospective home buyers into the market, experts said. Potential buyers remain spooked by falling home prices and rising unemployment. And even those who want to buy cannot find loans with reasonable downpayments and terms.”
Either way, it is posible that we could see a plan in the works by early next week. So stay tuned for more.