TAG | home loans
The Federal Reserve Bank is poised to pull the money off the table that has helped sustain the ailing real estate sector, $1.25 trillion to be exact, by March 31, 2010.
The Federal Reserve is currently winding down its purchase program of Mortgage Backed Securities that has been responsible for the recent streak of the lowest mortgage interest rates on record.
If you are considering a mortgage loan and you are on the fence about when to act, now could be the right time. Rates are not likely to be this low for much longer.
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Regional Fed Chief Says MBS Purchase Program Should End in March
Comments | Posted by admin in Uncategorized
Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said the central bank should end its purchases of mortgage debt as planned in March. This program has been instrumental in keeping home loan interest rates at or near the record lows of the last year.
U.S. FED bankers have debated whether increasing and extending asset purchases should the economy weaken, with a few favoring the move and one seeking a reduction in their Dec. 15-16 meeting. They pledged to complete $1.25 trillion in purchases of mortgage securities and $175 billion of agency debt by March. Read More
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Mortgage Rates Expected to Rise when FED Stops Purchase Program
Comments | Posted by admin in Uncategorized
According to a recent Bloomberg article, Mortgage bonds are poised to slump after a record rally as the Federal Reserve’s unprecedented buying of $1.25 trillion of the securities ends as soon as March, driving up interest rates on new home loans.
Rising mortgage bond yields mean loan rates are likely to end 2010 almost 0.75 percentage point higher than current levels, based on forecasts for government bonds and spreads, adding to challenges for a housing market struggling to recover from its worst slump since the 1930s.
The trend of rising interest rates appears to be gaining momentum. According to a recent Washington Post Article, Freddie Mac sees rates hitting 6% or above in the next year. If you are considering purchasing or refinancing a home and you are on the fence about your interest rate offer, it looks like the time to act is now. With rising rates, waiting to obtain a home mortgage loan could prove to be costly.
Fannie Mae is tightening its underwriting criteria by raising the minimum credit score for automated underwriting (Desktop Underwriter) from 580 to at least 620 for all loans, justified on the grounds that this action “will support prudent risk management and better ensure sustainable homeownership.” Even higher minimum credit scores may apply for both manual and automated underwriting, depending on factors such as the loan-to-value ratio and the number of units in the structure. The minimum credit score applies to all mortgage loans delivered to Fannie Mae, including FHA and other government-backed loans. Fannie is also changing the maximum debt-to-income ratio for Desktop Underwriter to 45 percent, but will allow 50 percent if there are “strong compensating factors.”
The new Desktop Underwriter Version 8.0, including the new underwriting criteria, takes effect the weekend of December 12, 2009. The revised minimum credit scores are already in effect for manual underwriting.
