Feds Throw the Deuces Up to Mortgage Help
Matt | On 25, Jan 2010
Attention homeowners and the real estate industry … enjoy these low mortgage rates while they last! Uncle Sam will no longer prop up the mortgage market as of March 31.
Here’s the quick and dirty scenario. As a response to the crappy economy fueled by garbage dump of homeowner mortgage issues, the Obama Administration put over $1 trillion into the mortgage market. This program is in line with the similar effort to bail out the banks. The idea was to lower interest rates, help homeowners refinance, and provide some stability to the mortgage-backed securities markets. Well, it worked! Houses have been bought and mortgages have been refinanced in certain cases. Real estate investors and homeowners have been greeted with historically low interest rates. Cue the white picket fence, buy the Yorkie, and PLEASE hang some drapes.
But, the government is not going to “sprinkle baby powder” on the homeowners forever. Never mind that the homeowners were the real victims in the housing market meltdown. Nope! The program ends at the end of March whether you like it or not. And get ready for that First Time Homebuyer Tax Credit to end a month later. ::sigh::
So, the homeowners are once again up a creek with no raft. Here’s what economists, real estate experts, and of course, I think:
- Mortgage rates will likely go up. Some think only a quarter of a percentage point. Knowing greedy bastards .. ahem .. the banks, it will most likely be higher.
- Refinancing to lower rates will be harder. See my first point. Interest rates will be higher.
- Help for struggling homeowners may not be as readily available. You know better than to think the banks are about to help you.
- The overall cost of buying a house will be higher on the front end. Without the tax credit AND with higher rates, be prepared to turn your house into a brothel IMMEDIATELY! You’ll need the spare dollar bills.
- Selling your home might be harder, as if it wasn’t already. New buyers, in some cases, will be priced out of the market.
The general thinking is that the assistance needs to be extended. Resident expert and Treasury Secretary Timothy Geithner doesn’t seem to think so. He, in case you missed it, was on the varsity all-conference squad of people who got us into this financial meltdown. I digress…
Read it all for yourself here in the Washington Post.