On Thursday, December 4, Freddie Mac reported that the average rate on a 30-yr. fixed rate mortgage fell to 5.53%, marking the greatest one-week decrease in the past 27 years. This historic drop fell from a previous rate of 5.97%. This current rate is nearly a full percentage point lower than just this past October. Critics argue that rate decreases are beneficial only for home buyers that are in a qualifying position, while not being of any benefit to current home owners who are in need of refinancing in order to keep their homes.
In addition to these current rates, potential buyers should be aware that the deadline for obtaining what is referred to as a conforming jumbo loan is January 1, 2009. As of this date, the maximum amount that both Fannie Mae and Freddie Mac are willing to buy will drop to $625,000 from $729,750.
Also as of the New Year, underwriting standards for these jumbo loans will rise. Most buyers will be required to provide a 20% down payment while possessing a debt-to-income ratio of as little as 30%.
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