Mortgage rates have been stubbornly high for quite some time but the government's recently announced $800B plan to bolster mortgages and consumer loans had an almost immediate impact in the form of lower rates on mortgages.
Last Tuesday, 30 year fixed rate mortgages dropped approximately half a percentage point. It is now possible to find 30 year fixed rate mortgages at 5.5% or even less. In order to qualify for this rate, borrowers will have to have a solid credit history, substantial equity or downpayment, and a credit score of 720 or higher.
The lower rates will increase refinancings, which should put more money in consumer's pockets. It is also hoped that the lower rates will convince some buyers who were sitting on the sidelines waiting for the market to bottom to enter the market. That would also be good news.
Unfortunately, the lower rates won't help the many, many homeowners who would love to refinance but can't because they owe more than their home is worth.
Mortgage brokers reported that they haven't seen activity at these levels for at least a year and many expect that rates could drop even further. For more information, check out this recent Wall Street Journal article.
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