In an effort to lift home sales and possibly values again, an article over at the Wall Street Journal today claims the Treasury is in talks with Fannie Mae and Freddie Mac to encourage banks to write mortgage loans at 4.5% fixed interest rate over 30 years. This of course would be temporary. The plan is apparently in talks and who knows if it would even happen.
Interest rates on mortgages in the Twin Cities lately have been hovering as low as 5 3/8 – 5 3/4 for buyers with solid credit.
It’s important to point out if this happened, only home buyers would be able to grab this low interest rate. If you are looking for a refinance then it appears that is tough luck.
But all things aside, the free market sets the rates for mortgage so without seeing any details from the Treasury it’s hard to see how this is going to get accomplished. To actually lower rates, mortgage backed securities have to be risen for investors to purchase and so far there just isn’t a demand for them.
I guess we will just have to wait and see…
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