| Mortgage Rates Hit 30-Month Low
More bad news on the economy sent mortgage rates down for the third straight week to a 30-month low. The average rate on a 30-year, fixed-rate mortgage fell 18 basis points to 5.69% during the week ended Thursday, according to a survey by Freddie Mac (FRE - Cramer's Take - Stockpickr). A basis point is a hundredth of a percentage point. Over the past three weeks, 30-year mortgage rates have fallen by a cumulative 45 basis points. Freddie says that's the steepest three-week decline since September 2003. At this time last year, rates on 30-year fixed-rate mortgages averaged 6.23%. The news wasn't all good: Those looking to purchase a home or refinance an existing mortgage can now expect to pay origination fees and discount points of 0.5% of the total loan amount, on average.
Jackson blasts Bush mortgage plan
Bush's recent bailout plan doesn't go far enough to solve the problem of foreclosures, Jackson said, pointing to the voluntary nature of Bush's program to freeze adjustable mortgage rates for five years. "By and large they will not do it because it's voluntary," Jackson said. "There is no structure in place to in fact begin to exact from them exploitative amounts of resources. There must be some government plan in place because it's about sparing the nation a recession." Glenn Mueller, a professor at the Burns School of Real Estate and Construction Management at the University of Denver, went even further. He told The Denver Post "the liars have won," saying that the mortgage plan rewards the lenders, whom he called cheaters. However, Robert Steel, the undersecretary of the treasury for domestic finance, told National Public Radio that the Bush plan will buy affected homeowners time to refinance their mortgages.
Broken Dream
Tamika Taylor put everything she had into saving her house. She drained her savings and borrowed from her retirement account to make her mortgage payments. But in the end, she could not keep up with her monthly payment, which had ballooned from $2,400 to $4,000. An auction date was set: Tuesday, Jan. 29. "The market has basically dropped," she said, a week before her home was to be sold. "There's little or nothing you can do except be at the mercy of the mortgage company." Looking back, Taylor admits she made an unwise financial decision. She took out an adjustable-rate home equity loan to pay off some bills and to live off of while she stayed home with her newborn. Like many others, she assumed she would refinance the loan before the higher rate kicked in. But then the market softened, leaving her, and thousands like her, stuck in bad loans.
|
