Home Affordability Improves!
Posted March 22, 2009
What a week for Mortgage and Housing! The Federal Reserve kept rates at current levels (a 0-25% range for Fed Funds) but the big announcement is the one that came from Treasury - in that they are going to be purchasing up to $750 Billion in Mortgage Backed Securities. Is that good news you ask? Fantastic news I say, and let me explain why and how it will impact the Triangle in a positive manner.
In simple terms, here is what we expect to happen by this movement from Treasury. With the purchase of these MBS instruments, comes a swell of liquidity and confidence back into the interest rate market. While one is technical and the other psychological, they both play a critical role in “righting the housing ship”. We’ve already begun to see some of the positive impact of this movement in the form of lower interest rates. How low will they go you ask? No one knows for certain, but we are approaching another round of historically low interest rates. Low, low rates and the inventory we have on hand for housing is very good news for home buyers and those interested in refinancing. Combine that with the new tax credit for first time homebuyers and the GSE mortgage refinance/modification programs, and you have a sweet spot scenario for housing in the triangle.
Treasury also announced a new website last week, www.makinghomeaffordable.gov – it’s an information site geared towards those who want to know if they’re eligible for the new housing stimulus initiative programs from the GSE’s. As a borrower you’ll be able to check online to see if your mortgage is part of the GSE pool of eligible loans for either refinance help or loan modification help. There are also links to Fannie Mae and Freddie Mac and other great information links within Treasury as well.
As an industry, we’re seeing a large increase in volume, so please be patient when contacting your lender or servicer. The above mentioned website should be a much faster avenue for eligibility determination, rather than the traditional toll free number you would find on your mortgage statement.
All of this is great news for housing here in the triangle. Jobs however need to return en mass in order to finalize the return of a healthy balance within housing. It doesn’t matter if interest rates go to 0% - if one doesn’t have a job, then interest rates are moot.
Jeremy M. Salemson
Corporate Investors Mortgage Group, Inc.