A Mortgage Update from Jay Skwierawski for the Week of December 8
Hello Everybody!
By now you've probably heard about the 4.5 percent mortgages that are coming soon. Someone from the U.S. Treasury leaked news about a plan that would use Fannie Mae and Freddie Mac to push banks to make mortgages available at close to 1 percent below the current going rate for a 30 year fixed rate mortgage. This newest plan to push rates to 4.5 percent is in addition to another plan announced last week wherein the Federal Reserve will purchase up to $600 billion in mortgages issued by Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Home Loan Banks. That program has already driven mortgage rates down by over .50 percent from where they had been.
Why 4.5 percent? I've been saying for a long time that a rate in the low to mid 4's is what it is going to take to get some buying interest. There are a lot of homeowners that purchased or refinanced within the past 5 to 7 years that have rates of 4.5 percent to 5.25 percent. They have been reluctant to move and give up their very favorable, low rates. Now, 4.5 percent fixed for 30 years - that may be too much to pass up. At least that's the hope!
When is it going to happen? That's a great question. Nobody knows the full details about the plan. There's been no indication about who might qualify, or what the restrictions would be. There's rumors that it would be for purchases only, which might be considered unfair to anybody wanting to refinance their existing ARM or higher interest rate fixed rate mortgages. Like many other recent legislative "solutions," the restrictions might be very tight, with income limits set very low, and as a result, helping very few people. Now that the plan has been "leaked," the details have to come out soon, or it might delay people from making home buying decisions while they "wait for that 4.5 percent rate." That would put another crimp in an already slow market.
It may make sense for most people to act now, and take advantage of current historically low rates... with the possibility of refinancing should rates decline further.
Please take the opportunity right now to contact all of your past clients and to let them know where rates are currently. If they have a fixed rate of 6 percent or above, or an adjustable rate mortgage that will soon adjust, it may be to their advantage to have them speak to your First Sterling Mortgage Services loan officer for a no-obligation, no-cost mortgage analysis.
30 year fixed rate conventional mortgages are currently available as low as 4.875 percent, with one point (paid by seller?), or 5.25 percent, with no points. Those are pretty much the lowest rates that have been available as long as I can remember!
Please call your First Sterling Mortgage Services representative if we can help you or any of your clients with any mortgage needs.
We appreciate all of your support! Thank you, and have a great week!
Jay Skwierawski
President
First Sterling Mortgage Services, LLC
737 North Michigan Avenue, #1900
Chicago, IL 60611
312.268.7601
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