After increasing for much of April interest rates on government-backed mortgages have been decreasing again for a several weeks and are now approaching new lows for the calendar year. Interest rates tend to track the 10 year treasury note so recent decreases in 10 year treasury yields have translated into 30 year mortgage rates below 5% in the last couple of weeks. Mortgage interest rates are volatile though so there is no telling how long this current dip will last.
Here is a quote from a recent WSJ article on this topic:
The average rate on the 30-year mortgage matched its lowest level since mid-January this week, according to Freddie Mac’s weekly survey released Thursday. …
“Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” said Frank Nothaft, vice president and chief economist at Freddie Mac, in a news release. “For instance, real economic growth in the first quarter fell short of the market consensus forecast and represented the slowest pace since the second quarter of 2010. In addition, both the manufacturing and service sectors exhibited growth at a slower rate in April.”
If you have an interest rate that is higher than you want contact us in the sidebar to see which programs might apply to your family.
The heads of Fannie Mae and Freddie Mac have recently indicated they are not high on the idea of principal write downs at all. This should come as no surprise to anyone. The problem with principal write-downs is that they are a Pandora’s Box for banks and investors. If lenders started forgiving principal for borrowers they would open a massive flood that could bury them. There are millions of underwater homeowners in the US. The majority of those homeowners are not willing to consider walking away from their homes. A foreclosure or short sale severely damages credit scores and that is something most borrowers would like to avoid. The banks benefit greatly from this fact. If banks and investors started offering principal write-downs they would certainly be overrun with requests and would have to deal with billions of losses that they currently are avoiding.
So while politicians like to make noise about principal reductions, banks and investors like Fannie and Freddie will continue to show zero interest in the concept in most cases.
However there are several refinance programs available that do help families. Contact us in the sidebar to learn more about those.
After slowly rising for more than four straight weeks interest rates on government-backed and conventional mortgages finally dipped again over the last week or so. The dip in rates is a welcome development to folks looking into refinancing. Rates on mortgages largely track the the yields on the 10 year treasury bond and with the recent dip in the stock market, yields on the 10-yr note have dropped as well. If you have been thinking about refinancing to a lower interest rate contact us in the sidebar right away to learn more about the programs available. Drops in interest rates sometimes don’t last long so now might be a good time to lock in a better rate than you currently have.