With so many changes in interest rates, goverment and the economy lately, I sought out some information on what is really going on with mortgage rates. Here is the scoop from Scott Smith of Flagstar Bank:
"As many of you know, mortgage rates have improved significantly over the past 45 days. We saw extreme volatility in rates during the fourth quarter of 2008, where 30 year fixed rates ranged from 5.75% to nearly 7% within a short period of time. Thankfully they are now in the 5% range, largely due to actions by Ben Bernanke and the Federal Reserve.
On December 30 the Fed announced that they would invest nearly $500 Billion dollars between January and June of 2009 to purchase Mortgage Backed Securities from Fannie Mae, Freddie Mac, and Ginnie Mae. Banks and mortgage companies issue loans to home owners, they then pool multiple loans together, securitize them, and resell these Mortgage Backed Securites (MBS) as investments that most of us own through our 401k's and other investment accounts. The demand and purchase of these MBS dictate what home loan rates are. So the Fed's commitment to purchase these MBS has is a direct way for the government to lower mortgage rates and make housing more affordable and stimulate further selling of new and existing homes."
Feel free to call Scott if you have any questions about interest rates, what's going on with the Fed, how to qualify for a loan, or anything else that is mortgage related.
Scott Smith
Loan Officer
Office: (801) 676-5531
Cell: (801) 209-3850
Scott.Smith@flagstar.com
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