About Government Refinance and Home Purchase Programs

The Fed announced a new plan today that will likely compress mortgage interest rates even further. Here is an excerpt from a HousingWire piece on the subject:

The committee also said “to help support conditions in mortgage markets” it will reinvest principal payments from agency debt into agency mortgage-backed securities.

That’s a departure from the Federal Reserve’s previous practice of reinvesting those proceeds into Treasuries and appears to be an effort to lower mortgage rates.

The purchase program, to be completed by the end of June, will involve longer-term Treasury securities with remaining maturities of six years to 30 years, and will be financed through the sale of shorter-term Treasuries with maturities of three years or less.

“This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the FOMC said in a statement following its two-day meeting.

Contact us in the sidebar to learn about which programs could help your family.

As expected, part of President Obama’s recently revealed jobs plan was a plan to make it easier for more Americans to refinance their mortgages to the historically low interest rates we have been seeing in the last month or so. The president outlined his plan last night and it looks like main idea is to make it easier to qualify for the already existing Home Affordable Refinance Program (HARP). Here are some quotes from a Reuters article on the topic:

President Barack Obama said on Thursday he is seeking to broaden U.S. homeowners’ access to mortgage refinancing in a plan to help the ailing housing market and put money back in the pockets of borrowers needing help locking into record low rates.

“We’re going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” …

The White House officials said the U.S. Treasury was having talks with both Fannie Mae and Freddie Mac and their regulator — the Federal Housing Finance Agency — on ways to broaden refinancings. The aim is to is to “remove the barriers that exist in the current refinancing program.” …

The refinancing initiative under consideration by the Obama administration would need final approval from the acting head of the Federal Housing Finance Agency, Edward DeMarco. Those close to DeMarco say he is acting as an independent regulator with the goal of conserving the assets at Fannie and Freddie, a position he has staunchly defended before lawmakers since the two firms were taken over by the government three years ago.

The encouraging news is that the Obama Administration does not appear to need the approval of the Republican-led congress to make access to the HARP program easier. Rather the administration mostly needs to persuade the independent head of the FHFA Edward Demarco that their plan is sound.

We’ll keep you posted on the progress of this new initiative. In the meantime, contact us in the sidebar to see which government-backed refinance programs you already qualify for.

As investors all over the world become increasingly nervous about world economic conditions more and more are buying up US treasury bonds as a safe haven for their money. That in turn is reducing the yield on US treasury bonds which in turn has continued to compress mortgage interest rates. The end result is that rates on government-backed mortgages are at astonishingly low rates this month.

Contact us in the sidebar to learn more details on the programs and rates connected with government-backed refinances. Dips in interest rates this steep normally don’t hold for long.

There has been a lot of speculation that President Obama will include a new mortgage assistance program as part of his speech this evening. We get this from a recent MarketWatch article:

President Barack Obama may suggest changes to a struggling housing refinance program to try to double the participation in the program and help kick start the economy in his speech before Congress on Thursday night, regulatory analysts said. …

The Federal House Finance Agency, which regulates Fannie and Freddie, may be considering a number of approaches to expand the participation of both lenders and so-called “underwater” borrowers of Fannie and Freddie-backed mortgages who owe more than their homes are worth. However, regulatory observes insist that all these approaches increase costs to taxpayers and damages mortgage investor confidence.

Of course whatever he pitches probably won’t make it past congress so on the ground level it likely won’t make much immediate impact. But it will be interesting to see what the plans are anyway.

This afternoon the Fed made the unusual pledge to keep its lending rates at record lows for a full two years more. This action was undoubtedly spurred by the recently faltering US economy. The Fed seems to want to bring some confidence and stability back into the market.

Early results were encouraging. Not only was there a rally in the stock market, mortgage interest rates dipped pretty substantially mid-day. If you have considered lowering your interest rate now is the time to get a quote on one of the government-backed mortgages programs. Contact us in the sidebar for guidance on getting an estimate.

Over the weekend S&P lowered the credit rating of the United States from AAA to AA+. As a result stocks have taken a beating over the last few days. Yet despite this announcement from S&P, mortgage interest rates on government-backed mortgages have dipped even further this week. Part of the reason for that is that mortgage interest rates usually follow the yield on the 10 year treasury note and the yields on those T-notes has continued to drop.

While decreasing values on Wall Street is not a good thing, it has not been a bad thing for mortgage interest rates for now. Contact us in the sidebar this week to learn which government-backed refinance programs could help your family while rates remain near 50-year lows.

VA Loans are mortgages that are available to the families of US military veterans. For folks who are eligible, VA loans have some terrific benefits. Here are some of the positives of refinancing into VA loans:

– You can get up to 100% of the current value of your home. This is true even when the the refinance is rolling in a first and second mortgage (unlike HARP and FHA loans)
– There is no monthly mortgage insurance fee associated with VA loans (unlike FHA loans)
– Rates on VA loans tend to be quite low
– Overall lender fees on VA loans tend to be lower than other loans

Having said that, there is an upfront funding fee associated with VA loans. For that reason refinancing into a VA loan is not always the best option even for borrowers with VA eligibility. Still in some cases refinancing into a VA loan is an excellent solution.

Contact us in the sidebar to learn more about refinancing into a VA loan as well as the other government-backed loan programs that are available.

With the US Congress finally agreeing on a deal to avoid defaulting on US debts, demand for US bonds picked up again this week. As a result of that increased demand the yields on the 10 year T-note have been dropping and as usual mortgage interest rates are dropping as well. The upshot of it all is that rates on government-backed mortgages are very close to 50 year lows again this month.

But with so much uncertainty in the world economy right now there is no telling how long these low interest rates will be available. If you have considered refinancing your mortgage contact us in the sidebar this week to see if there are government-backed mortgage programs that could benefit your family.

If you are tracking mortgage interest rates here is a useful trick that could help. It is not widely known among the public, but mortgage interest rates tend to track to the yield on the 10-year treasury note. When the yield on the 10-year T-Note goes up mortgage interest rates tend to go up, and vice versa. So if you are wondering about mortgage interest rate trends a quick and easy way to gauge things is to look at the trends on the 10-year treasury notes. See here for an example of the last three months of that 10-year T-Note. Mortgage interest rates on 30 year fixed loans tend to be between 1.5% and 2.25% higher than the yield on this 10-year note. (Although that can vary depending on other market factors). Still in terms of macro trends on rates this is a useful tool.

As of this week yields on the 10-year note have been dropping for more than a month so interest rates have generally followed suit. That means now would be a great time to contact us in the sidebar to learn which government-backed mortgage programs might work for your family.

Mortgage interest rates began dipping again in recent weeks as bad news economic news has continued to surface. With the disappointing jobs numbers that came out recently and continuing economic struggles in Europe more and more investors have been fleeing to the relative safety of US bonds, which in turn has been lowering the yield on those bonds. As we have discussed in the past, when yields on the 10-year treasury note drop mortgage interest rates normally follow. The end result is that rates on conventional and government-backed mortgages are continuing to slowly drop this week.

Of course such trends are always temporary so contact us in the sidebar this week if you have considered a refinance. With the debates over the debt ceiling still raging in Washington DC there is no telling how long it will be before rates move higher again.

The short answer to this question is: Not much so far. Mortgage interest rates on government-backed and conventional loans have remained near historic lows over the last few weeks as demand for the 10 year T-Note remains high and thus the yield remains low. But if a deal is not reached between Congress and the White House by August 2nd it is feasible that the demand for US bonds will dry up and that in turn could lead to a spike in interest rates.

If you have been considering locking in a lower rate on your mortgage it might be safest to lock in your rate soon. There is a lot riding on the debates between the GOP and the Democrats right now in Washington. All sides seem to believe a deal will get done but in the off chance it doesn’t rate could potentially go significantly higher in August. Contact us in the sidebar for more information on refinance programs that might apply to you.

There was a pretty good article over on Foxbusiness.com with some housing market predictions for the second half of 2011. One of the predictions that we think is likely is that while mortgage interest rates are likely to remain low by historical standards, they are unlikely to remain as low as we have seen in the recent dip that has from May to June. In fact, in the last week of June we already saw a small sell off in bonds which caused mortgage interest rates to start rising again for the first time since April. We expect that rates will rise somewhat in the coming months for all mortgage types, including government-backed mortgages.

If you have been rate watching as you consider a refinance now is probably a good time to contact us in the sidebar to learn which programs might work for you and to get some estimates put together.

Here is a quote from that article mentioned above:

Mortgage rates are near record lows, but some mortgage experts say the party won’t last long as they expect rates to climb in the next few months. They don’t foresee a major spike, but rather an adjustment to bring them back to “normal” levels.