WASHINGTON — Government efforts to provide easier credit to consumers and help housing-finance companies could push mortgage rates “well below 4 percent,” a federal regulator said Wednesday.
James Lockhart, whose procurement oversees government-controlled mortgage giants Fannie Mae and Freddie Mac, made the comments at a auditory of Women in Housing & Finance, an industry group. He did not say in what condition far-reaching it would please to achieve such a drop and has declined to engage a firm target for pledge rates.
Rates fell sharply later than the Federal Reserve announced plans late endure month to purchase up to $600 billion of mortgage-related securities and other debt issued by Fannie, Freddie and the Federal Home Loan Banks. In the two banking days following the Nov. 25 announcement, the national average price on a 30-year fixed-rate mortgage dropped 0.28 percent, to 5.5 percent, according to financial publisher HSH Associates.
Fannie and Freddie own or guarantee about half of the $11.5 trillion in U.S. outstanding home-loan liability.
Neel Kashkari, who heads the Treasury office overseeing the $700 billion bailout of the financial system, told a congressional array last week that the agency was reviewing a proposal to push mortgage rates down to 4.5 percent.
The government’session efforts to trim mortgage rates are the same part of the attempt to solve record-high foreclosures and lend delinquencies. Other plans include a simplified loan-modification program, and interest-rate cuts by the Federal Reserve.
Weiss Research analyst Mike Larson declared this week that government attempts to drive down mortgage rates are having some success. “Lower prices in some of the hardest-hit markets, and almost irresistible bargains on distressed properties, are also bringing some buyers out of the woodwork,” Larson said.
But lower mortgage rates also could thwart housing prices from dropping as much as they otherwise would. That would mute their effect attached the overall economy.
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