New 4.5% mortgage plan won't apply to refi's

This is a great article by Bloomberg news. I get calls on a regular basis regarding the news on a 4.5% consumer mortgage rate. Its my opinion that interest rates are the best I have seen in years. When the rates drop the window will be short…and we are close.  Typically they touch down for a short window..and bounce back quickly. The lenders have limited capacity due to liquidity reasons so timing is very important. I would like to prioritize you..See below for the article…

Bloomberg News

A plan under consideration by the Treasury to push home-loan rates down to 4.5 percent will likely exclude refinancings to keep the U.S. budget from swelling further and to prevent disruptions in the mortgage-bond market, analysts at Barclays Capital Inc. and JPMorgan Chase & Co. said.

While a new program for homebuyers is a “clear winner” and likely to be created, “extending it to all borrowers could cause serious problems,”

Ajay Rajadhyaksha, the head of fixed-income strategy in New York at Barclays, wrote in a Dec. 12 report.

The government has used multiple programs to lower mortgage costs to help the housing market better absorb an estimated 5 million foreclosures and curb a yearlong recession. By applying the new plan to refinancings, the government runs the risk of pushing other investors out of the market for mortgage bonds, which may have longer-term consequences, Matthew Jozoff, an analyst at JPMorgan said.

“This policy, while good for borrowers in the short run, would threaten the role of private lending in the mortgage market for years to come,”

Jozoff wrote.

Potential refinancers may be best off acting soon to take advantage of a plunge in rates in response to record low Treasury yields and a separate U.S. program. The average rate on a 30-year fixed-rate loan dropped to

5.45 percent in the week ended Dec. 5, the lowest since March 2004 and down from 6.47 percent in the week ended Oct. 31, a Mortgage Bankers

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