Fed Aid Sets Off a Rush to Refinance

Wall Street Journal ^ | NOVEMBER 26, 2008 | By RUTH SIMON and JAMES R. HAGERTY

[Ernest_at_the_Beach]

The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs.

Some brokers said it was the most activity they've seen in at least one year, although there was no way to determine to volume of refinancing.

At Bank of America Corp., call volume was roughly twice what was expected at call centers and via the Internet, said Matt Vernon, national sales executive. "It's the folks who have been sitting on the sideline. They're jumping in with this news."

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Reuters

Maria Arellano, center, joins a Tuesday rally in Sacramento, Calif., asking state lawmakers to stop home foreclosures and help modify home mortgage loans to make them more affordable.

Rates on 30-year fixed-rate mortgages dropped by roughly half a percentage point to about 5.5%, for borrowers with good credit scores and substantial equity in their homes, ..........

[Ernest_at_the_Beach]

fyi

[SMCC1]

Is that an ACORN poster i spy? lol

[ChocChipCookie]

“Affordable housing” sounded good until I realized that what it really meant was loaning out money to people who didn’t have a chance in hell, or even the intention, of ever paying it back.

[thetru]

The Money Masters - How International Bankers Gained Control of America
http://video.google.com/videoplay?docid=-515319560256183936&hl=en

[IllumiNaughtyByNature]

to about 5.5%, for borrowers with good credit scores and substantial equity in their homes

Which means everyone running to refi is going to get about 6.5% + PMI

[WilliamReading]

I just checked with Countrywide and they are now quoting rates at 5.375 for 30 year loans, 5.125 for 15 years.

Need 20 percent equity and 720 credit score.

[jwalsh07]

The problem? Easy money.

The solution? Easy Money.

Easy stuff.

[dalereed]

Lowering the principle on mortgages is criminal and nothing but theft from those that live responsibly!

[IllumiNaughtyByNature]

Good to know. Less than 18% of the population have a credit score over 720 and far less (that actually need the refi) have 20% on their upside down houses.

It'll be interesting to see what the numbers breakdown to after about a year on what IR they actually got.

[WilliamReading]

Actually, about 40 percent of the population has a 720 or higher. And my guess is that 70 percent of all homeowners have 20 percent equity, especially if you bought 5 years ago or more. Plus most new buyers will have 20 percent down if they want to get the best rates.

[IllumiNaughtyByNature]

I am not sure about the 20% down. I was in and a part of the housing market in So. Cal from 02-06 and got the fudge out when i saw what my last house was valued at.

The hardest hit will be the 0% down, stated income borrowers.

Those that bought what they could afford, will refi to get the better rate, but the ones who need it are screwed. I have tracked my last house (sold at $550K) and the buyer put 20% down. It was last valued at $380K) So technically he's fine since his 20% is now 28%, but he was the exception to the rule. The first offer we had was from some guy with stated income, married, wife pregnant with twins and was going to go $10K over what he was qualified for to get it.

I'd like to see interest rates set at 5% for anyone past due by 2 months on payments as of a certain date without it being pre announced. That would stop a lot of the balloon parts of the mortgage and save some houses.

Thoughts.

[meyer]

Ohhhh, 5.125 on 15 years sounds like a refi opportunity to a lot of us 20%+ down people. Especially if we’re planning on buying down the mortgage (if not paying it off).

[WilliamReading]

Quicken is quoting 4.75 plus 2 points.

Why has it taken so long for Hank Paulson to drive these interest rates down? We are now in a deflationary environment so we don’t need to worry about inflation for the time being.

[justlurking]

Ohhhh, 5.125 on 15 years sounds like a refi opportunity to a lot of us 20%+ down people.

I took an opportunity like that a few years ago: 15 years at 5%. I've since pre-paid two years of principal, so my final payment will be in about 7 years.

[psjones]

5 years ago we were able to get a 30 year mortgage with a
5 1/8 interest rate, 0 points. People who went for the arms when rates were so low back then were idiots or were trying to buy a house they could not afford to buy otherwise.

[icwhatudo]

We locked in 5% with 1 point for 30 years at about the same time. Makes me sick to learn others who went variable rate will now be bailed out. Where do I go to get my point back?