Mortgage Rates Dropping Fast, Set to Save the World

Mortgage rates are headed below 5%, with or without the help of Hank Paulson. Agency coupons this morning were at all-time lows, with Fannie's (FNM) down 23 basis points, to 3.64%. Agency yields have now fallen by 40 bp since Monday, 110 bp since December 1, and 240 bp since November 1. While not a perfect proxy for the consumer mortgage market, stable spreads to corresponding funding rates translates into lower consumer mortgage rates.

Good! Ultra-low-priced mortgage money is just the thing for stabilizing home prices through demand stimulation. And low mortgage rates should drive a wave of refinancing, which would in turn provide more economic stimulus--and better targeted--than all the infrastructure spending than Nancy Pelosi can imagine. Responsible homeowners are "shovel-ready."

Comments

[jimmy Turano:]

Good article Mr. Biggs. Being a Real Estate Broker for thirty years in New York, I look forward to the BOOM that is coming in 2009.
If first time buyers do not wake up and take advantage of discounted home prices, lower rates than we have seen in decades, coupled with the
necessary write offs a Home brings you, they will find it difficult to survive
paying the high rents and new taxes coming our way!
If they do not have the 20% or so down payment, and their parents are in their eighties, have a home, with no mortgage, then they are in luck.
Their parents can take a Home equity loan, refinance their home, or take a reverse mortgage to help their children. Many parents want to help their children and many are giving their children their inheritance money ahead of time. Why not? Better than letting the Nursing Home take all the money! I already am planning seminars for the Adult centers in Queens beginning in 2009. In middle village alone, I will be speaking to thousands of senior citizens who own homes and have no mortgages. They can either help themselves and or their children too.
If I can be of service please contact me.
JIM TURANO

2008 Dec 18 08:52 AM

[LQA Golfer:]

To fix the Mortgage Backed Securities (and the banks)...first fix the mortgages wih lower rates, longer terms and/or renegociated principals. Or, just send more bonus money to Wall Street and Detroit, and, of course, give Congress a raise.

2008 Dec 18 10:11 AM

[xmplary:]

Already getting e-mails from from builders and lenders for rates as low as 4.5% I believe it will help in the new year, but the job losses and a scary economy is having a toll as well.

2008 Dec 18 11:38 AM