There is a lot of speculation that mortgage rates will rise above 6% once the Government’s different programs run their course (TARP, $8000 New Home Buyer Credit, etc) and financial institutions stop their foolish purchasing. Believe me, this is a good thing. Especially if you have been saving cash to buy a home. High interest rates make everyone’s cash in the transaction more valuable. And reading articles like the one below are indicating exactly that. Now, whether or not the Government steps in with something new to prop things up is anyone’s guess. But if they don’t…watch out. Housing prices would have no where else to go.
MORTGAGE FINANCING
FHFA reducing Fannie, Freddie portfolios
The federal regulator in charge of Fannie Mae and Freddie Mac said Tuesday that the mortgage finance giants would not be taking on additional measures to bring down interest rates on home loans as other government programs to stimulate the housing market expire.
The Federal Housing Finance Agency said it is committed to reducing the companies’ mortgage portfolios and does not expect the firms “to be substantial buyers or sellers of mortgages.” The agency said it expects private investors will step in as other government initiatives, such as the Federal Reserve’s trillion-dollar mortgage-acquisition program, wind down.
– Zachary A. Goldfarb
The scary part is that more and more of my friends are walking away from their homes. And this downward pressure on home prices will incite more debt slaves home owners to do just that. Walk away. So where does it stop?
