Burgeoning Interest Rates Threaten to Stifle Recovery

30-year fixed mortgage rate is lowest on record

(NEWSER) - Homeowners continue to scramble for refinancing in order to lock in currently low interest rates, MarketWatch reports, with applications jumping 25.6% last week, to the highest level since June 2003. The average interest rate on a 30-year fixed-rate mortgage fell 0.10% for the week ending Jan. 9, to 4.89%—the lowest rate since the Mortgage Bankers Association began keeping statistics in 1990. More»

Proposal could save homeowners $85B annually

(NEWSER) - Help could be on the way for struggling homeowners with government-backed mortgages: The Obama administration is considering a proposal that would allow such homeowners to refinance their mortgages at today's interest rates, which hover around a low 4%. Many homeowners can’t currently refinance because they owe more than their house’s current value or have poor credit. Such a move could impact millions of homeowners and save them an estimated $85 billion a year, thus stimulating the economy by freeing up that money to be spent in other areas, the New York Times notes. More»

(NEWSER) - The country’s top lenders are slowly implementing the Obama administration’s plan to help otherwise ineligible borrowers to refinance their mortgages at the current bargain-basement rates, the Wall Street Journal reports. The program is open to those with mortgages owned by Freddie Mac or Fannie Mae who are current on their payments, but who owe 80-105% of their home’s value. More»

Citi drops opposition to Senate proposal

(NEWSER) - A Senate plan to help struggling homeowners keep their houses moved closer to fruition yesterday as Citigroup ended its opposition to the bill, the Wall Street Journal reports. The measure would allow so-called “cramdowns,” in which judges in Chapter 13 bankruptcy cases could set lower principal and interest rates, or extend the terms of loans. Citi has changed its stance after receiving $45 billion in government aid in the fall. More»

Fed should ignore critics, hold its ground until markets rebound

(NEWSER) - Critics claim the Federal Reserve has been too eager to cut interest rates, and that lax policy has exacerbated inflation. But the Fed should hold its ground, Desmond Lachman argues in the American, until the housing and credit markets are clearly on the rebound. The credit crunch has prompted banks to compensate with higher spreads and tighter lending standards, which should offset inflationary concerns. More»