Altadena Real Estate

Excellent News…Could There Be A Light At The End Of The Tunnell?

According to an article in today’s Los Angeles Times, mortgage interest rates fell for the 6th consecutive week:

“Mortgage rates are down for a sixth straight week, a sign that the government’s latest efforts to break up the credit market logjam are working.

The average 30-year fixed home loan rate fell to 5.47% this week — a four-year low — from 5.53% last week, mortgage giant Freddie Mac said.

The rate has tumbled from 6.46% at the end of October.

U.S. regulator James Lockhart, whose agency oversees Freddie Mac and Fannie Mae, said Wednesday that the government’s programs to ease the credit crunch could push mortgage rates “well below 4%,” the Associated Press reported. But Lockhart didn’t give a timetable for that kind of drop.

Home loan rates fell quickly beginning the week of Nov. 24. That was when the Federal Reserve said it would commit $600 billion to buy mortgage-backed securities of Freddie, Fannie and other U.S. agencies, trying to pull down yields on those bonds and thus drive down rates on mortgages underlying the bonds.

The Fed telegraphed Thursday that it would buy some Freddie and Fannie bonds today, which could give another downward tug to loan rates.

But the Fed is, in part, just making up for a sudden lack of demand for U.S. mortgage bonds by foreign investors. Those investors have been paring their holdings of mortgage debt in favor of U.S. Treasury issues.”

Steve and I have actually begun to see the effects of lower interest rates in action. Several of our clients are hoping to take advantage of this rarely seen combination of reduced rates and lower housing prices by purchasing homes at price points higher than what they previously thought they could afford. Even visitors to our open houses are mentioning the need to act quickly before rates begin to creep up again.

Bottom line: we’re hopeful that consumers’ increased buying power will help fuel a firming of the local housing market.

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