Government Actions To Keep Mortgage Rates Low

Washington, DC, April 22, 2009--Conforming mortgage rates are likely to stay low for the remainder of the year, according to the Mortgage Bankers Association's chief economist.

With continued government support, rates should hold at their current level over the next six or seven months, said Jay Brinkmann, MBA's chief economist. That's a welcome prediction for the many homeowners who have had difficulty getting someone on the other end of the phone or have experienced long delays waiting to get to the closing table.

"It's unlike past refi waves, where it tends to be that interest rates take a big drop, but don't stay there very long," he said.

By investing heavily in the mortgage markets, the government is playing a huge role these days in making home loan money available for borrowers.
 
Mortgages are bundled and sold to investors on the secondary market, which provides liquidity for lenders who are then able to make more home loans available. When the secondary market freezes up, as it did for jumbo mortgages during the height of the credit crunch, borrowers can end up paying higher rates for loans, if they can get them at all.

But returning confidence to the mortgage market also has a lot to do with housing fundamentals, added John Courson, the MBA's president and CEO. With climbing unemployment and a weak economy, investors and consumers need to regain their faith in housing in order for things to fully recover