Some Positive Signs for the Housing Market

The FED is planning on buying up to $300 billion of long-term government bonds and an additional $750 billion in mortgage backed securities guaranteed by Freddie Mac and Fannie Mae. This will help ease the credit crunch that has been going on. Some of this money is coming from the $750 billion rescue package passed last year.

The announcement of these purchases had a direct impact on mortgage rates. Rates have dropped about .4% over the past two days. Mortgage applications have been at their highest levels of the year over the past two weeks and with rates dropping again they should be even higher this week. These lower rates will allow more people to qualify for refinance loans and purchase loans which will ultimately help the economy.

This is not a fix all, but it is part of the overall plan to turn the housing market and the economy around. The government has implemented or put into place guidelines for:

1. A first time homebuyer tax credit of $8,000
2. Mortgage Refinances at 105% loan to value
3. Loan Modifications for all homeowners who qualify, not just people who are behind on their mortgage
4. Lowered the Federal Funds rate to 0%
5. Purchased or is purchasing $750 Billion worth of mortgage backed securities

I am sure they are not done yet, but this is definitely a good start. These guidelines will take a little while to trickle through the system, but once they have been implemented and completed the housing market should show sign of a recovery.

If you would like to refinance or purchase a home check out www.thebriteway.com and give us a call.