F&F Takeover: What Consumers Need to Knowby Tim Manni
As we’ve seen throughout the day, mortgage rates are falling, and it seems likely they’ll fall further. The 30-year conforming fixed rate mortgage actually fell by almost a third of a percent to 6.04%. Of the changes that the bailout will bring to the mortgage market, lower rates are just the first. The full impact won’t be known for months, if not years.
As mortgage rates drop, or at least stabilize, hopefully buyers will be attracted to the housing market. What many potential buyers do not understand is that a better mortgage rate can save you more money in the long run than a cheaper ticket price on a home. Homebuying is a multi-month process, so rates will have to remain stable for some time to really make any improvement in the market. As far as falling home prices are concerned, only home buying can correct that scenario.
Homebuyers can be assured that a stable source of liquidity has been established, and the price of mortgage money for borrowers with good credit has gone down. Hopefully now that the Treasury Department plans on purchasing $5 billion worth of mortgage backed securities, that will attract investors to do the same.
The wheels have begun to turn, and whatever can or will happen, it all starts with lower mortgage rates.