Fannie and Freddie taken over, mortgage rates down sharply

September 8, 2008

With the federal goverment seizing control of Fannie Mae and Freddie Mac , it should be no surprise that mortage rates are down sharply.

Actions by the Treasury were meant to stabilize financial markets and ensure mortgage availability and affordability. Mark Zandi, Chief Economist at Moody’s Economy.com said, “Effectively, the federal government has now become the nation’s mortgage lender. This takes a major threat off the table.” He notes that 30 year mortgage rates, currently averaging 6.35% nationwide could dip to 5.5% because investors will be more willing to buy the debt issued by Fannie and Freddie – and at lower rates – since the federal government is now explicitly standing behind the debt.

I just got a new rate sheet from one of my preferred lenders quoting a 30 year fixed rate mortgage at 5.625% with a one percent origination fee and at 5.875% with no origination fee, both rates are down sharply from just last week.

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Posted by Howard | Filed Under Blog, Mortgage / Finance 

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