22-29 March 2009 Interest Rate Information Milwaukee Area

Source: Milwaukee Journal Sentinel Real Estate Section 22 March 2009

Mortgages slip to near-record lows

Fed action may push them down further

Washington -Rates on 30-year mortgages fell last week to the lowest level since January, and my fall further after the Federal Reserve launched a new effort to prop up the weak housing market.  Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.98% last week, down from 5.03% the previous week.  It was the lowest since the week of Jan. 15, when it was at 4.96%, the lowest point in the history of Freddie Mac’s survey, which goes back to 1971.  The rate quotes included in Freddie Mac’s survey were taken before the Fed said Wednesday that it would pump $1.2 trillion into the economy in an effort to lower rates on mortgages and loosen other credit.  That could drive mortgage rates down even further, perhaps past record lows.  However, some mortgage brokers were disappointed on Thursday, saying lenders had not pushed down rates on the news as dramatically as had been hoped.  Credit remains tight, and lenders that are not connected to banks and must rely on short-term funding are having trouble raising cash.  “The problem is: We’re still not seeing the injection of capital from the private sector,” said Douglas Braden, a broker with Northern Colorado Mortgage Co. Plus many lenders no longer have staffing to keep up with the refinancing boom.  Interest rates have drifted lower since November when the Federal Reserve pledged to buy up mortgage-backed securities in an effort to bolster the long-suffering housing market.  The Fed expanded that effort Wednesday, announcing plans to buy up to $300 billion of long-term government bounds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.  The average rate on a 15-year fixed-rate mortgage dropped to 4.61% last week, Freddie Mac said.  Rates on five-year adjustable-rate mortgages eased to 4.98%, compared with 4.99% the week before.  Rates on one-year, adjustable-rate mortgages rose to 4.91%, from 4.80%.  The rates do not include add-on fees know as points.  Milwaukee-area borrowers generally prefer not to pay points and instead pay somewhat higher interest rates.