Treasury Urged To Lower Mortgage Rates

Lobbyists Want Rate Slashed By 1.1% To Stabilize Housing Market

(AP)  Financial industry lobbyists are urging the Treasury Department to take steps to lower mortgage rates in an effort to stabilize the housing market.

Under the proposal, Treasury would seek to lower the rate on a 30-year mortgage to 4.5 percent, Scott Talbott, a vice president at the Financial Services Roundtable, said Wednesday. That's about one percentage point below the current rate of 5.6 percent.

Treasury would do so by purchasing mortgage-backed securities from Fannie Mae and Freddie Mac, Talbott and other industry sources said.

Treasury is strongly considering the proposal and could announce a decision as early as Monday, industry sources said.

Treasury spokeswoman Brookly McLaughlin said she would not comment on speculation about actions Treasury may take in the future.

In recent weeks, a diverse set of industry groups from real estate agents to carpet makers have called on lawmakers and the incoming administration of President-elect Barack Obama to subsidize lower mortgage rates and beef up tax credits to help stimulate housing demand.

The National Association of Realtors has been pushing a plan under which the federal government would spend $50 billion to lower mortgage rates. It says doing so would yield about 500,000 more home sales.

The National Association of Home Builders is leading a new "Fix Housing First" coalition to push for aid to the ailing housing sector, including a tax credit of up to $22,000 for anyone who buys a home before the end of 2009.

"The goal is drive mortgage rates so low that home prices not only stop falling but begin to rebound," said Greg McBride, senior financial analyst at Bankrate.com.

While the plan, if enacted, will help anybody looking to buy or sell a home, or refinance out of an expensive mortgage, it may not help those whose credit is so damaged that banks don't want to lend to them.

"It may change the number of borrowers seeking loans but it won't change the qualifications for who gets those loans," McBride said.

[joetx53]

Mortgages aren''t the only problem. What about credit card rates? How can the banks justify 18%-24% with their prime rate so low? One reason people are defaulting on mortgages is because they are paying the banks a fortune in finance charges and fees!

[michael0004]

If mortgage rates dropped why would it not help refinancers? They get the same or similar rates from the same lenders. I''''ve been watching rates for both for many years and the two rates have always been similar or exactly the same. Explain the moaning and groaning, I''''d like to understand your complaint.
[e-mail]

It''s simple, say you got a 30 year fixed loan of 320,000 at 6.5% on your house that WAS appraised at $400,000 at the time you got your existing loan. You want to refinance, but say you now owe $310,000, but the value of your house has declined to $280,000. You now have negative equity in your house. You won''t be able to get a loan to refinance for any more than 90% ($252,000)of the appraised value of your home. So, in order to refinance, you will have to come up with $58,000 out of pocket at closing, not counting the usual closing costs, ($58,000 plus $252,000 equals $310,000) to pay off your existing loan. Very few people will have that kind of money available. Hence, very few people in this type of situation will be able to refinance at any interest rate.

[whitemale08]

Hank the Snake Paulson doesn''t know what the hell he''s doing. The guy is the worse Treasury Sect. we''ve ever had.

You don''t stabilize the after-math of a blown-out ponzi-financial-scam like we have in this country by ''lowering interest rates''.

You must ''freeze all foreclosures'' first i.e. moritorium on foreclosures.

You don''t want to do that because you still want to give opportunity for some to make a profit on foreclosure''s.

This is why you guys are stupid because you insist on making a ''spread'' (profit from usury) instead on caring for the welfare of the people.

Everything you have tried has failed, time to listen to Lyndon Larouche and Ron Paul.

1. Shut-down the private Federal Reserve System

2. Convene a new Bretton-Woods treaty to fix exhange rates.

3. Get all countries to use their regained sovereignty over failed ''private-central-banking systems'' to invest in grand infrastructure and utility projects.

[random_radar]

Why not lower mortgage interest rates to 3% or 1% or 0%? Why not pay people to buy houses with mortgage subsidies?

If we can lower interest rates with a wave of the Fed''s magic wand, why not print money for everyone? Why should money only grow on trees in bankers backyards?

[hbevis]

WE ARE LOOKING AT THE BEGINNING OF A GOVERNMENT TAKE OVER OF ALL LENDING. PUT ANOTHER WAY IT IS SOCIALISM COMING INTO PLACE.

[cbscrash072]

Hell, stop taxing me and I''ll buy another house. I like that idea better anyway.

[cbscrash072]

If the governments stop taxing me I promise I''ll spend an extra $1000 a month.

[timothyone-2009]

If mortgage rates dropped why would it not help refinancers? They get the same or similar rates from the same lenders. I''ve been watching rates for both for many years and the two rates have always been similar or exactly the same. Explain the moaning and groaning, I''d like to understand your complaint.
[e-mail]

[forasongca]

It also won''t help anyone seeking to refinance, whose property value has dropped "under water," regardless of their creditworthiness.