Interest rates for 30-year fixed mortgages are at astoundingly and historically low levels.  But lending standards are stricter, so fewer potential buyers are able to qualify for them.  The Fed will pump hundreds of billions of dollars into the mortgage market this year to keep rates low.  Its program to buy Fannie Mae and Freddie Mac securities has helped to push rates for 30-year fixed conventional mortgages down to below 5%, a reported 4.82% average in mid-April.

Due to the combination of low mortgage rates and the decline in home prices, America’s houses are at record levels of affordability. The National Association of Realtors’ Housing Affordability Index stood at 173.5 in February and should climb to even greater heights in succeeding months. The index is at 100 when a family with the median income has exactly enough income to purchase a median priced home (assuming 20% down, with housing principal and interest at 25% of income).  The affordability index averaged 107.6 for 2006.

An immediate result of the low mortgage rates was a refinancing boom.  The boom, which has been in full swing for a few months, got a boost from the administration’s Making Home Affordable foreclosure prevention program, which will reach some who have been ineligible for a refi under the old rules.

Fannie Mae’s Home Affordable Refinance and Freddie Mac’s Relief Refinance Mortgage provide refinance options for those current on their mortgage payments, but who, due to a decline in home prices or where mortgage insurance is not available, have been unable to refinance in order to obtain a lower payment or move to a mortgage with a more stable rate.

The Fannie and Freddie programs will permit loan-to-value ratios of as high as 105%.  The programs started functioning in April and will continue in operation until June 10, 2010.  Click here anytime for the latest Montgomery County MD listings between 250k and 350k…  now that’s affordable!  These listings are updated daily.

BJ Matson, 240-281-6732
Montgomery County Realtor®
choicerealestate.net contributing writer

This entry was posted on Tuesday, May 5th, 2009 at 2:19 pm and is filed under 3) General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.