The front page of today’s Wall Street Journal (this is premium content but click here for link) introduces an interesting idea being discussed around the Treasury Department to increase home sales. The Treasury is discussing a plan to encourage banks to offer real estate home mortgages with rates as low as 4.5%. Yes, that’s 4.5% for a 30-year fixed rate mortgage. This would be done by using Fannie Mae, Freddie Mac, and the Federal Housing Administration to guarantee the loans, meaning the secondary market for mortgages, which the federal government now had significant control influence over, would have buyers for these low rate securities.
This move would be seen as the government taking more action to stabilize housing prices and sales but in reality would have a minimal impact on current distressed home and condo owners. The theory is that with more affordable mortgages, buyers can spend more on a home and housing demand will increase. This will not apply to mortgage refinancing but only new mortgages.
On that note, mortgage refinance applications are up 300% to take advantage of recent drops in home interest rates, currently at an average of 5.75%.
Contact your preferred lender today for mortgage market rates in Denver to see where you stand or contact us for a lender referral.
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