Mortgage Market News: Mortgage Interest Rates Spike, Plan for Foreclosures
Today, there is a reasonable amount of mortgage market news — and it’s still before noon. The biggest items of interest for some are the following:
- Mortgage interest rates are spiking.
- The FDIC and the Treasury are unveiling a plan to stymie foreclosures.
Mortgage interest rates head higher
While yesterday’s Fed rate cut is likely to help adjustable rate mortgages and home equity lines of credit, it is not very favorablet o fixed rate mortgages. Indeed, as CNN Money reports, mortgage interest rates are following Treasury bond yields higher:
“Long-term mortgage rates followed long-term Treasury bond yields higher this week, pushing fixed-rate mortgages up to levels of two weeks ago,” said Frank Nothaft, Freddie Mac (FRE, Fortune 500) vice president and chief economist.
Last week, mortgage interest rates were sitting at around 6.06%. Now they have spiked rather dramatically to 6.46%. This time last year, they were at 6.26%. It appears that everything that has to do with money and finance is volatile right now, and in a state of flux. And that includes mortgage interest rats.
New plan to stop foreclosures
So far, everything the government has tried to stymie increasing numbers of foreclosures has fallen a bit short. So the FDIC and the Treasury are adding to the efforts with a new plan. Rather than simply attacking toxic assets, the government now plans to try and fix the problem at the source: Mortgagest hat are likely to slip into foreclosure. The idea is for the government to guarantee restructured loans, reports BloggingStocks:
The plan, which could place as many as three million homeowners in affordable mortgages, would require lenders to restructure mortgages based on the borrower’s ability to repay. In exchange, banks / lenders would receive a federal guarantee that the loan would be repaid; program guarantees are estimated at $500 billion.
An interesting idea. However, there are likely to be some homeowners who will not be able to repay no matter what — unless the new terms include a very long mortgage term of between 40 and 60 years. I wonder if that is what is had in mind. If the borrower can’t repay in 30, offer him or her a 60 year modified mortgage so that payments can be made.
Tags: mortgage interest rates, mortgage rates, mortgage market, mortgage market news,
interest rates, Fed rate cut, home equity lines of credit
