Great News for Rates!

So, some good news comes our way....one of our lenders' 30 year fixed conventional was down to 5.25% today. Yay!

Finally Treasury and the Fed have opened the door all the way. After fiddling with the credit crisis for months with drips and drops of help, the government has swung into high gear and likely will not let up until the problems of frozen credit are thawed and not just anticipated as Paulson and Bernanke have been expecting with each 'plan'.

This morning's announcement that the Fed will purchase as much as $600B in debt issued or backed by government-chartered housing-finance companies; and will also set up a $200 billion program to support consumer and small-business loans finally gets to the core of it. Banks are being strangled with mortgage delinquencies and bad debts on most loan programs. Up until now the government has resisted the obvious, get the junk off the books of banks. Defaults on single-family mortgages and construction loans continued to accelerate in the third quarter as banks and thrifts added $50B to loan loss reserves for the second consecutive quarter. After closing 22 banks this year, FDIC officials said the deposit insurance fund has declined to a 0.76% reserve level and the FDIC board will meet in December to consider a hike in insurance premiums. The FDIC's problem bank list has jumped to 171 institutions with $115.6 billion in assets, up from 117 institutions in second quarter.

A re-fi boom coming? Not out of the question if the momentary euphoria in MBSs holds. Not like the previous boom but good enough to generate increased volume. Not going to jump for joy yet but any possible positive news is very welcome in this environment.

*Stats and figures courtesy of Director's Mortgage, right here in Portland Oregon.