ANXnewsOnline 12-09-08 At the end of this past month, the last week of November, applications for mortgages for homes rose a seasonally adjusted 38%, compared with the week before. Borrowers are taking advantage of lower interest rates according to the Mortgage Bankers Association.
 
The Federal Reserve has announced, that it is purchasing up to $100 billion in debt from government sponsored enterprises (GSE) Freddie Mac, Fannie Mae and Federal Home Loan Banks. The Feds are also purchasing up to $500 billion of mortgage backed securities backed by Fannie, Freddie and Ginnie Mae. This huge mortgage bailout, overshadowed by bailouts of the auto and financial industry, has infused a measure of confidence back into a shaky real estate market. This recent bailout caused mortgage interest rates to drop the last week of November.
 
The Mortgage Bankers Association (MBA) reported that 30-year fixed-rate mortgages were at a 5.47% average for the week that ended on November 28, down from the previous week at 5.99%. A healthy drop. MBA also reported that 15-year fixed-rate mortgages were at a 5.13% average for the same week, down from the previous week at 5.78%. To put these figures in context, applications for all mortgages, including re-financing, were down almost 22% compared to a year ago.
 
Still, this solid evidence that people are willing to purchase homes, is hopeful. This healthy development need not be missed in all the disturbing news of markets tumbling. Not only are lowered interest rates attracting buyers, but lower home prices are creating a ‘buyer’s market’ that the public is waking up to. This is good news.
 
The big question, is whether mortgage applications will lead to approval? Surely, not all applications warrant approval, but the ball is clearly in the mortgage industry’s court; to approve or not to approve. That is the question.
 
The heads of lending institutions need to re-evaluate their new stringent rules that are continuing the credit freeze. If they open up their lines of credit to worthy loan applicants, they can take advantage of this ‘silver lining’ and prevent this very expensive yet under-reported government bailout from becoming another exercise in futility. Reporting filed by David Iarussi