The Fed’s program to buy Fannie Mae and Freddie Mac securities has helped to push rates for 30-year fixed conventional mortgages down to below 5%, a reported 4.82% average in mid-April.  Due to the combination of low mortgage rates and the decline in home prices, America’s houses are at record levels of affordability.

The National Association of Realtors’ Housing Affordability Index stood at 173.5 in February and should climb to even greater heights in succeeding months. The index is at 100 when a family with the median income has exactly enough income to purchase a median priced home (assuming 20% down, with housing principal and interest at 25% of income). 

In addition to low rates, borrowers got a boost from the administration’s Making Home Affordable foreclosure prevention program, which will reach some who have been ineligible for a refinance under the old rules.  Fannie Mae’s Home Affordable Refinance and Freddie Mac’s Relief Refinance Mortgage provide refinance options for those current on their mortgage payments, but who, due to a decline in home prices or where mortgage insurance is not available, have been unable to refinance.  Thus they cannot take advantage of a lower payment or move to a mortgage with a stable fixed rate. The Fannie and Freddie programs will permit loan-to-value ratios of as high as 105%. The programs started functioning in April and will continue in operation until June 10, 2010.© 2009, Real Estate Information Services, Capitol Assets, & Choice Finance®

Eric Strasser
Loan Officer, 301-996-5001
contributing editor choicefinance.net

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