Home Front: Broker says Wall Street crisis pushes down mortgage rates

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A blog about the economy and the Sacramento-area real estate market.

September 15, 2008

Broker says Wall Street crisis pushes down mortgage rates

In the whirlwind that overtook Wall Street today something else amazing happened: mortage rates fell again sharply, according to Rancho Cordova mortgage broker Michael McGee. The owner of Winchester McGee Financial said he saw rates for 30-year fixed-rate loans fall to 5.625 percent, plus a point. It was just like last week after the announcement that the federal government had taken over mortgage giants Fannie Mae and Freddie Mac.

McGee thinks even better rates are coming as investors flee from the stock market to quality in the bond market. He said the price of mortgage-backed securities rose sharply Monday, which means interest rates came down.

The problem is lending standards are still getting tighter, which means it's a better time than ever to borrow, but also harder and harder to get a loan.

I talked with Victoria Benbow, a Sacramento real estate agent, who said it's "unbelievable" what hoops that borrowers are having to jump through. She has a client with a 780 credit score and a long stable job history who went through the ringer with her lender to get approved.

Benbow, of Coldwell Banker, said, "I think what it is is nobody wants to be the next guy to get fired (for approving a loan, that is)."

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