Those of us in the mortgage business have been watching mortgage interest rates with one eye on our list of past customers, hoping rates will finally mirror the lowering bond market.
The Emergency Economic Stabilization Act (more commonly known as the Wall Street Bailout Plan) was passed under the presumption that $700B was needed to buy up troubled assets such as mortgage backed securities (which is why the program was originally called TARP - for Troubled Asset Relief Program). The program was supposed to work by taking the troubled assets off the market and off bank balance sheets thereby enabling the banks to regain their footing and not be forced to sell these assets at fire sale prices. The plan was supposed to stop the downward price spiral of mortgage related securities, free up capital for loans, slow foreclosures and stabilize the financial markets. That was the plan anyway...
But then, Sec. Paulson had a change of heart about 10 days ago, rates did a U turn higher, CitiCorp went to $3.00 a share, and the whole thing was out of wack!
Now the Fed is Announcing the "Mother of All Bailouts," and they are going to purchase $800 Ba Ba BILLION in Mortgage Backed Securities!!!
I got three calls from Good Citizens here in NC yesterday asking about 3.5% fixed rates mortgage money. One guy said, "What Do You MEAN you don't have 3.5%?!?! To be sure the damn gov'mnt ain't gonna' spend ALL that Bailout money on the damn banks!"
A couple of times this year, we've had "REFINANCE- Boomlets," meaning one or two days that rates hit less than 5.5%. It might not be a "boom" but if you are purchasing, or need to consolidate your first and second mortgage - the window of opportunity might be opening.
I would be careful, and act quickly, because it could just be a curve right back up!