Some good news in the housing market
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KAI RYSSDAL: A funny thing happened on the way to the economic meltdown yesterday. Part of the bailout actually worked. After the Fed announced it’s gonna plow $800 billion into the consumer debt market, mortgage rates dropped and they dropped pretty sharply, too. Marketplace’s Jeremy Hobson reports, that set off a bit of a chain reaction.
JEREMY HOBSON: Mortgage rates have been hovering above 6 percent for months. So even though home prices have dropped, many buyers had been holding back for a better interest rate. Until yesterday, when the rate dropped to 5.5 percent.
CARLOS GUTIERREZ: They’re calling immediately and saying “Hey, I know rates are coming down. Are we going to be able to get that better rate?”
That’s Carlos Gutierrez, the President of CNC Mortgage in Minnetonka, Minnesota. He says buyers were in a better position to take advantage of the deal than those looking to refinance.
And Holden Lewis of Bankrate.com says that’s because many homeowners couldn’t refinance right now even if they tried.
HOLDEN LEWIS: They don’t have good credit. They don’t make enough money to repay the loan. Or more importantly, they owe more than the house is worth. Those folks, they’re not going to be able to refinance.
And of course, taking advantage of the low interest rate requires something else. Loan officer Dan Green in Cincinnati says you’ve got to pay close attention to the Fed’s moves.
DAN GREEN: The average American isn’t trained to understand what it means for mortgage rates when the Fed says they’re going to inject $500 billion into Fannie Mae and Freddie Mac. They only find out about it, you know, this morning when they opened up the newspapers. And by then mortgage rates had already retreated off their lows.
Rates, I’m sorry to say, are now back up around 6 percent. But analysts say they’ll likely come down again when the Fed actually starts buying the mortgage-backed securities.
In New York, I’m Jeremy Hobson for Marketplace.
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