Rates are low! It's a bargain time to buy a home!

FYI~ Ladies and Gentlemen:

So......rate this morning dipped to near 4.75% and then rose back to around 5% by end of day. Many are saying that rates will be in the mid 4% range with or without the treasury plan - I completely agree. But with the dollar weakness and Opec's attempts, they may not last too long.

For $#%^# sakes! It is an absolute bargain time to buy. Read below.

Home loans cheapen after Fed steps in

By Lynn Adler Lynn Adler December 17, 2008

NEW YORK (Reuters) - The Federal Reserve's promise to expand a massive mortgage debt buying program pushed U.S. home loan rates to at least 5-year lows on Wednesday, putting them on track to hit the lowest levels in four decades.

Average 30-year fixed mortgage rates sank by about 1/4 percentage point to around 5 percent, but could end the week even lower and provide a much needed boost not only to consumer pocket books, but the economy.

The Fed said on Tuesday it might pump up a program to buy up to $500 billion of mortgage bonds issued by Fannie Mae, Freddie Mac and Ginnie Mae to free lenders to make new and lower-rate loans, and stimulate the worst housing market since the Great Depression.

Rates are still volatile in an unstable market, said Phil Immel, broker at Prudential California Realty in Dana Point, California. "But in two to four weeks, the goal of reaching 4-1/2 percent mortgage rates on conforming product should be a reality," he said.

That's a huge drop from October when the thirty-year mortgage rates were closer to 6-1/2 percent and equal to a more than $300 saving on each monthly payment for a $250,000 loan.

"It should be a great boon for home buyers and or people refinancing," added Immel.

After ending unchanged on Tuesday after the Fed action, the average 30-year mortgage fell to 5.05 percent on Wednesday afternoon from 5.30 percent, according to HSH Associates.

"The Fed did announce some important and expanding supports for other markets and mortgage markets especially," said HSH vice president Keith Gumbinger, in Pompton Plans, New Jersey.

If rates end the week at an average of 5-1/8 percent, as expected, it would be the lowest level in at least 46 years, he added.

By some other measures, the loan rate fell to 4.70 percent on Wednesday from 5.01 the day before, according to Zillow Mortgage Marketplace.

Bankrate said brokers are offering conforming loans near 5 percent. It expects to broach a new low this week or next for its 23-year-old weekly rate survey, under the prior record of 5.28 percent in June 2003.

Rates have edged lower in the past month since the Fed first announced this plan, as well as its intention to buy up to $100 billion of other debt issued by Fannie, Freddie and the Federal Home Loan Banks.

TOURNIQUET

The lowest rates in at least five years, and two years of steep home price declines improve home affordability, but will not recreate the record refinance and purchase boom seen earlier this decade.

As endemic of this cycle in which the boom turned into a bust of record late payments and foreclosures, even sharply lower rates won't be enough to help everyone.

"There will be a fair percentage, probably 35 percent or more," that might be unable to refinance because of income changes or their house is worth less than their mortgage, Immel said. "We're putting a tourniquet on a patient right now that could die easily. That wasn't happening four or five years ago."

Earlier this decade, when rates were last this low, money was easy and lenders offered a wider array of often riskier products that have been extinguished.

House prices still have room to fall because of near-record levels of unsold inventory, housing analysts said, keeping many buyers at bay. Unemployment is spiking.

The savings could be meaningful if a borrower has the employment, income and credit score to qualify, however.

A homeowner with a $250,000 30-year mortgage taken at 6 3/8 percent is paying about $1,559 each month. At the latest rate nearer to 5 percent on Wednesday, the payment could be cut to around $1,318, according to HSH Associates.

Still, "the market is very different today than four or five years ago," Gumbinger said. "Those lows were the result of private market investor appetites. We would not be at these levels without the government's stated appetite for mortgages and mortgage-backed securities."

David H. Stevens

President - COO

Long & Foster Companies