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Well mortgage rates have been dropping and homeowners are rushing to refinance -- now the government like to get involved there have been proposals floated out there.
That might stimulate demand for mortgages at four point 5%.
The government wants to basically back people to buy new homes.
That a good idea joining us now from global Kentucky David -- chairman of the Mortgage Bankers Association.
David do you support the Treasury's at least idea I'm not sure but the full plan at this point.
-- Brian good morning from mobile.
It just leaked out -- treasury last night we haven't had sufficient -- -- look at -- there could be some issues with that how it affects the marketplace.
What we should be focusing on today.
Is the fact that the Federal Reserve is buying up to 500 billion of the G -- these mortgage backed securities when they announce that.
The spreads on thirty year mortgages actually dropped 75 basis points this week we were six and a quarter on third.
It is amazing and but the but the steepness and the quickness of the drop you know historically one would that would suggest -- somebody say well.
It can't last -- and you expect mortgage rates to stay at this level for long.
We expect mortgage rates to -- down they still have more room to move.
Historically rates track a 150 basis points over the ten year treasury.
If that history was correct we'd be at 4%.
On a thirty year mortgage today so spreads are still too high.
They need to come down but -- five and a half to five and 38.
That's a savings of about a 140 dollars on a 300000 dollar mortgage from just ten days ago that's real money in the consumer's pocket.
And our weekly applications week to week -- up a 112%.
This week over last week that's huge the economy is coming back just -- that people are getting and it's not only -- good time to refinance.
It's a good time to go out and buy you get a house in May be down in value rates at historic thirty year lows right now that's a perfect scenario.
David it's Dagen McDowell how many of those people who applied for refinances.
And for homes -- by how many people are actually getting a mortgage you call it I think the pull through -- what does it.
The pool for right I don't have that information for you -- -- -- know they have the application.
Rate was up a 112%.
I can speak.
Personally from our own company our -- -- rate is north of 80% and that's a very good pull through rate.
What David okay here's my concern and I wrote about it on foxbusiness.com.
Low interest rates let's say the government does this or even if they don't do -- -- half 5% very favorable historical.
People are incentivized to buy a home.
Will that not know do more long term damage to the housing market.
It may help in the short term.
But if you're owning a home with a 5% mortgage and -- five or six years from now we revert to the mean we're looking at 77 and a half a percent mortgages.
Lot of those people simply are not going to move.
Because they can't get the same interest rate and are gonna wind up paying a lot more just a short term fix that's gonna create a longer term problem.
That is a very possible scenario.
You're you're exactly right on it could that's why we need time to look at it study it -- see -- the government needs to at this point.
Get in further into the marketplace.
If we can tightened spreads further if we give time for this mortgage backed securities 500 billion purchase of the GSC and BS debt.
Let's see if spreads tightened further on their own if they do and we come down to around five or below.
That's beautiful -- I remember originating in feeding my family 25 years ago it's seventeen and a half percent.
We remember those days five and a half and five creates the day is not a bad rate.
David Kendall chairman of the Mortgage Bankers Association from -- Kentucky David thank you very much -- welcome Brian.
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