March 7th, 2013
Mortgage rates have increased three straight days in a row bringing them to the highest level they have been since February 25th. The lowest of the low were back in September and October, and per strategist Matthew Graham, the rates will not go back down that low due to uncertainty in the EU.
On Monday, Edward DeMarco, acting director of the Federal Housing Finance Agency, announced he was going to combine some of the divisions of Freddie Mac and Fannie Mae as part of efforts to overhaul the system with the goal of shrinking the government’s role in the mortgage finance system.
From USA Today:
The government rescued the companies in 2008 with $170 billion in aid, the costliest bailout of the financial crisis. So far, the companies have repaid a combined $52.3 billion.
DeMarco said the new entity, separate from Fannie and Freddie, could eventually be sold or used as the foundation for a restructured mortgage market.
Fannie and Freddie were created by Congress to buy loans from mortgage lenders and package them as securities for sale to investors. By buying the loans from banks and other lenders, they provide a fresh flow of cash to the mortgage industry. Fannie and Freddie eventually became public companies, owned by shareholders.
The Obama administration unveiled a plan in 2011 to slowly dissolve Fannie and Freddie. The proposal would remake decades of federal policy aimed at getting Americans to buy homes by creating a system that relies far more on private money. Exactly how far the government’s role in mortgages would be reduced was left to Congress to decide. Several proposals are before Congress, but none has yet been acted on.
The levels are still at a historic low. If you are thinking of a new home or refinancing, you should talk to a reputable mortgage loan officer. They spend a lot of time staying on top of market trends and programs to help you find the one that best suits your situation.