What's Up With Mortgage Rates?

This came from David Osborne with Ashford Funding. I have worked with David before and can recommend him highly. Clearly he is staying ahead of the curve with the latest in the mortgage industry.

Fed Moves to Encourage Banks to Lend at 4.5% Interest Rates

Several news sources and the front page of the Wall Street journal today discussed the Treasury’s plan to spur the housing market byOffering low interest mortgages, possibly as low as 4.5% interest. Before we all go out and spread BAD information, here is what is known now:

• The proposal is still being discussed, and nothing has been finalized.
• The Wall St journal suggested, that even if this does happen, it probably won’t be until after Bush leaves office…Jan, Feb or later.
• The Wall St journal article said that the 4.5% rate would be for PURCHASES ONLY, not REFINANCES; the intent of the program is to spur NEW home sales.
• These loans would not be indexed with the 10 yr bond, but would be a special TBill offered to banks at a low rate, e.g. 3% in order to allow them to fund at 4.5%.
• I recommend to start shopping now, prequal them withtoday’s interest rates, and work with a lender that could float them down before closing if this does occur.

So, I know that my buyers are thinking, "I'm going to wait for this to happen to buy so that I can get a phenomenally low rate." But, keep in mind that if/when this happens, lots of like-minded buyers are going to come out of the woodwork. At that time the balance of power could shift to the bold home owners who are braving the market. It's never been more important to talk to a mortgage professional who has your file ready to go when you find the right home.

Let me know if you have any questions about this. If I can't answer your question, I'll put you in touch with one of my preferred lenders who are extemely knowledgeable of the market and offer excellent service.