Fannie & Freddie Failure = Mortgage Rates Drop By 0.5%

September 9, 2008 By Jonathan Ping 6 Comments
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I’m still on several mortgage brokers’ e-mail lists, and it appears that the government takeover of Fannie Mae is a glimmer of sunshine in what has probably been a very bleak few months for them. The message: Mortgage rates have dropped by around 50 basis points (0.50%) today! So if you are in the market for a loan or refinance, you might want to see what’s available out there.

This Reuters article questions if the drop will last:

The 30-year fixed-rate mortgage has fallen to near 6.00 percent on Monday from 6.50 percent on Friday, according to Greg McBride, senior financial analyst at Bankrate, Inc, in North Palm Beach, Florida.

[…] “The question is how much of the interest rate drop will actually stick,” he said. […] “There are concerns about how much debt the U.S. will be issuing as a result of this bailout and that could pressure benchmark Treasury yields, offsetting some of the improvement in mortgage spreads”

Filed Under: Real Estate
Last updated: September 9, 2008
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Comments

  1. js6664 says
    September 9, 2008 at 6:48 am

    This is very temporary, so people better grab these rates while they can. And I’m afraid to find out what happens when the U.S. Government needs a bailout and the taxpayers can’t afford it because of all their mortgage and credit card debt! Oh yeah…China.

    Reply
  2. Nate says
    September 9, 2008 at 7:01 am

    Aww damn… why couldn’t this happen next summer? I can’t buy anything right now!

    Reply
  3. "Mo" Money says
    September 9, 2008 at 7:01 am

    I am against government bailouts, but this may be so large that the whole real estate market could collapse. That could spell disaster.

    Reply
  4. David says
    September 9, 2008 at 7:56 am

    Unfortunately these rate drops don’t apply to jumbo mortgages which are still high. I’m currently on a jumbo 10/1 ARM (on the 2nd year now) at 5.625% but if the 30 or 15 year fixed rates do drop to the rate that I’m at presently, I’ll definitely refinance to a fixed rate mortgage.

    Reply
  5. Banditfist says
    September 9, 2008 at 9:24 am

    If you can refi or need a mortgage….do it and do it now! The markets will figure it out very soon. Paulson’s bazooka was a dude.

    Reply
  6. sema says
    September 15, 2008 at 8:00 pm

    Hi Jonathan: I’m a regular reader of your Blog. Thanks for some wonderful insights. After FF, Lehman failure, now its potentially AIG. Do you think WAMU will add the list…Any thoughts?

    Reply

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