Will the Weak Housing Market Keep Mortgage Rates Low?

As I mentioned a few weeks ago, refinance mortgage rates could be going up at the enad of this month due to the end of the government stimulus programs aimed at keeping mortgage rates low.

But with a housing market that continues to show weakness, will the government not do something to keep mortgage rates low? One would suspect that the Fed will be keeping a close eye on the mortgage rates front. Some are guessing that the end of the Fed buyback programs are already built into today’s rates while others have been expecting a decent jump up in rates for April.

The overall economy has experienced a bit of a rebound as of late, which may put a damper on government stimulus to keep mortgage rates as low as they are now. It could be that a continued growth in the economy with a continued weak housing market could help to keep mortgage rates in a historic low “range”, but not necessarily at the levels we have experienced over the past several months.

Another cog in the wheel of the direction of mortgage rates is the future of the GSE’s such as Fannie and Freddie. The whole mortgage and housing market currently relies on the three government pillars, Fannie, Freddie and the Federal Housing Administration (FHA). There has been no real direction coming from the Obama administration on how these entities will be reformed. Future reform for these behemoths is up in the air at the moment.

Some on Capitol Hill argue that the government's push to expand homeownership through Fannie and Freddie was the main cause of the financial crisis, and that they should be phased out within four years. This could kill investor confidence in government guaranteed mortgage securities and cause a major rise in mortgage rates.

Yet, there are some powerful interests that don't want to rock the boat too hard. The National Association of Realtors is pushing to preserve Fannie and Freddie, but as nonprofit government authorities without private shareholders.

I opt for the latter as a solution, as we need to keep investors buying-up quality mortgage securities, while keeping the spread and corresponding mortgage rates as low as possible during the stabilization of the housing market.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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