I called Mark Hanson this morning to see if there was any improvement in the mortgage. Mark said “Rates fell from 5.5 to 5.375 on intervention rumors this morning but are now back to 5.5. If rates stay in the mid 5’s, new loan applications will quickly dry up.
By the way, that 5.5% rate is pretty much for the “perfect borrower” with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.
Mortgage banks that made unhedged commitments at 4.25-4.75% are now in a position to lose substantial sums of money.
Bernanke thought it would be an easy task to keep down mortgage rates. So much for a $1.2 trillion commitment. What’s next? A $2.4 trillion commitment? Fannie Mae, Freddie Mac, and the FHA are the lenders of only resort yet the Fed is still struggling to rig the market.
