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November 26th, 2008

Mortgage Rates Drop — HSH on WSJ Front Page

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Yesterday’s actions by the Federal Reserve sent mortgage rates down to levels unseen since February of this year. According to HSH, the conforming 30-year fixed rate dropped to 5.77% from 6.06% on Monday, the largest single-day drop since September 8 of this year when the Fed announced Fannie Mae and Freddie Mac would be put into conservatorship.

From the front page of the Wall Street Journal:

Yesterdays Actions by the Federal Reserved Dropped Mortgage Rates to February Levels

Yesterday's Announcements by the Federal Fed Dropped Mortgage Rates to February Levels

Yesterday the Federal Reserve announced their plans to spend $800 billion on two new initiatives to stimulate the consumer credit and housing markets.

According to the S&P/Case-Shiller Home Price Indices, home prices continued to fall across the country throughout September:

“This is a win-win,” said Susan Wachter, a professor of real estate at the University of Pennsylvania’s Wharton School. “It will directly increase demand for housing and help with the downward spiral in home prices.”

Falling mortgage rates have historically been able to bring potential homebuyers out of the wood work. Yet, if home prices still do not stabilize, we may not see the improvement it so desperately needs. If Ms. Wachter is right, and the current drop in mortgage rates added with the Fed’s latest initiatives can begin to curtail falling home prices, we may start to see a positive turnaround in the housing market.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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