Possible Temporary Rate Drop by Treasury to 4.5%

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Will Twin Cities Interest Rates Fall To 4.5%

With the current situation of the real estate market, the Treasury is in talks with Fannie Mae, Freddie Mac and the Federal Housing Administration but it may not be enough. This would apply to 30 year fixed rate mortgages and the government footing the bill yet again.

Don’t get to ahead with this though. Mortgage rates are set by the free market, always have been. This would be some sort of artificially stimulating home prices, aren’t we just working are way through this now? For the Treasury to try and influence this is beyond me and it will be interesting to see more on this when it becomes available. The way interest rates are lowered is when mortgage backed securities are being purchased and that is just not happening because of supply and demand.

Just hold on, if this in fact happens the only ones that this would affect would be new home buyers interested in buying a home. It will not help out distressed home owners that are currently behind on their mortgage or facing foreclosure. This will also not apply to refinancing on a current mortgage, only new purchases.

Will this just be a band aid

This is another way that the government is trying to stabilize the market but will it hold? Last week they announced the purchase of $600 Billion in mortgage related obligations that sent rates plummeting and refinances skyrocketed. Talking to local loan officers, they have yet to see the influx with new purchases but rather just a rise in refinancing applications.

I tell everybody this, do not plan to purchase if you are looking for a quick flip. People are going to have to wait 5-7 years just to break even on selling a home. Buying a home is not a short term commodity. Buy a home for a place to live and to raise a family.

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