Interest Rates Drop to a 4 year Low
Interest rates have dropped to a 4 year low in the past 2 weeks because Federal Reserve instituted direct purchases of $100 billion of Fannie Mae and Freddie Mac (the mortgage giants) obligations, and plans to buy another $500 billion of mortgage backed securities. The Fed set up a Term Asset-Backed Securities Loan Facility (TALF) with the help of $20 billion from the Treasury, and will purchase up to $200 billion in commercial paper backed by consumer loans. The Fed’s actions are a big step, but they have made big steps in the past. The fact that they will now buy mortgage-backed securities is huge, and is a direct help to housing, one of the main areas of economic weakness. These programs are a way for the Fed to further expand the total amount of reserves outstanding while directing the new money toward areas where it is needed.
Rates are currently at 5.125% on a 30 year fixed loan, paying no points, on loan amounts greater than $125,000 and up to $417,000, showing income, primary residence, putting 20% down, 740 plus credit scores, with escrowing your taxes and insurance.
Here is a great article about rates hitting a 4 year low from The Wall Street Journal.