Fanie/Freddie Bailout GOOD For Mortgage Rates!!

Ever since the Federal Reserve Bank announced yesterday they were going to take over Fannie and Freddie I've been looking for signs of good news. I came across an article in the MortgageNewsDaily that has one economist talking lower rates. Here is a little bit of what Brian Bethune, chief U.S. economist at Global Insight had to say, "The takeover will be bad news for existing shareholders but good news for American households: first-time homebuyers will benefit from lower mortgage rates, as will those who can refinance their mortgage. He said there is a "very high probability that 30-year fixed mortgage rates could move down to close to 6% within weeks, and possibly drop below that level by the end of 2008."

Bethune also said the deal makes the implicit guarantee of the government on GSE debt more explicit, and a result he expects to see a significant decline in GSE funding spreads.

"Our best guess is that funding spreads could drop by 40-50 basis points from average levels of about 80 basis points on 20-year debt in the past six weeks," he said, noting that a drop in mortgage rates should provide an affordability boost in addition to the declining prices seen over the past two years."

That's good news for buyers, seller, Realtors, bankers, insurance men, in fact it's going to be the shot in the arm our economy needs. Keep your eyes on my blog for further details and have a great day!!

Aaron