Yesterday I wrote about the possible problems of getting a 5% loan. On Wednesday I started to hear about another plan. Maybe you may have heard all the buzz about Republicans wanting a 4% fixed mortgage rate for mortgages. You can read or listen to a good overview of the whole story on NPR. It’s an interesting idea. Let’s take a look at it a little more closely.
Don’t Count On 4% Mortgages…and Here’s Why
Honestly, I don’t think it is going to happen. It’s a HUGE undertaking that will be wildly expensive, and hard to implement, despite what the idea’s proponents are saying. And, you still need Wall Street‘s buy-in. The investments that will make it possible have to get sold, and investors are just too skittish on mortgages right now to go anywhere near dumping the kind of money that would be required to make this system work.
Likely a False Hope That Can Cause Problems
I don’t think I can speak for all mortgage professionals, but for most of us, when news like this comes out, it creates false hope and false anticipation, like when they were talking about 4.5% a couple of months ago. We either get calls saying something like, “Hey, I heard there’s gonna be 4% mortgages, and I want one” or a prospective
client says “Well, I’m gonna wait for now, cuz I think rates will be down near 4% soon.” This is sad and often counter productive?they may be passing on a 5% rate, only to have the rates go up, and the best we can do for them is 5.75%.
Like a lot of government ideas, it’s well-intentioned, but ill-fated.
Agree? Disagree? Let me know in the comments area below. I’d love to hear your thoughts.