The home mortgage rates have been continuing to fall during the past few months. There has been a drop in the Mortgage Rates up to .05%. This has been the result of the Government takeover of the mortgage giants Fannie Mae and Freddie Mac during the first week of September 2008. The decision to take over the mortgage giants was taken, stating that they were so large, that if either of them would fail it would lead to greater turmoil both in the housing market and the world finance market. Because of the drop in rates the houses have become cheaper and more money is available in the market for borrowing. You can get a loan of upto 80% percent on your home and it would be sensible take as much as it is required and for big purposes like college tution or for paying of your debt where you end up getting tax deduction benefits. The takeover has resulted in reducing mortgage rates and making houses more affordable than before atleast for a short while. The housing stocks have not reached their rock bottom.
The Current Trend of Home Mortgage Rates:
• Interest rates on 30 years fixed loans have reduced under the assumption that the government sponsored enterprises will stabilize the mortgage market.
• Prices of some of the housing stocks have surged as a result of relief over the Freddie and Fannie take over by the Government.
• It is also felt that though the rates have dropped the main problem is with regard to the glut of unsold homes in the market.
• Placing Fannie and Freddie in conservatorship removes significant amount uncertainty around home market.
• It is expected that there will more proactive measures preventing the foreclosure of mortgage insurance.
• The home prices are expected to fall further along with a reduction in interest rates.
• Takeover is seen to be a significant step towards recovery.
