Morgage rate lowered due to Fannie and Freddie bailout

Sep 14, 2008 | Comments 1

The mortgage rate has been pushed lower by the U.S. government take-over of mortgage giants Fannie Mae and Freddie Mac, although this is great news for homeowners looking to refinance, who for consumers looking to purchase a property, but this take over is automatically going to make the home loans easier to obtain.

According to Freddie Mac’s weekly survey, as the government bailout was taking place, the interest rates on 30-year fixed-rate mortgages dropped substantially, and for the first time since May it fell under 6 percent.

When looking at the national average for the 30-year old fixed rate loan was 5.93 percent for the week ended Thursday, down from 6.35% the prior week and 6.31% a year ago.

However, the weakened housing market has pushed the lenders to tighten up their lending criteria and they also require larger deposits from the borrowers, this has put a barrier for some first time buyers who are struggling to find the larger deposits.

Read full article in the WSJ

Filed Under: Mortgage News

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  • elo

    I feel like I don’t have enough background in economics to have a sense of what sort of disaster might ensue if a bailout didn’t happen….(Maybe a similar crisis, but sooner?) But making even more generous loans to those who can’t afford them seems like the worst possible tack to take.
    James Surowiecki wrote a piece in The New Yorker back in March ( http://www.newyorker.com/talk/financial/2008/... ), questioning the high value that Americans place on home ownership.

    Dr. Tantillo (‘the marketing doctor – http://blog.marketingdoctor.tv ) did a post naming Freddie & Frannie this week’s ‘brand loser(s)’ and calling for what he terms a “brandover,” arguing that marketing will need to play a key role if F&F are too be successful in the future–and that they’ll need a new name.

    Here’s a link to Tanillo’s full post