http://www.federalreserve.gov/newsevents/press/monetary/20081125b.htm

it looks like they said they would begin buying them in the week following the announcement of Nov 25th.

The rates sure have responded!

Today I was seeing an FHA 30 yr fixed offered at 5%, with no discount points. My eyes bugged out!

I’m not seeing where they have the January 1, 2009 date for the Fed to buy MBS and I don’t see that date referenced in the link you’ve provided. Would you mind sending me an email with where you’re seeing this on MMG?

However, I agree with your assessment about working with a LO with the ability to renegotiate / float down. The rates have responded well since the announcement on November 25th that they were going to buy (FNMA 6.0% Bond gained 84 bps that day).

http://money.cnn.com/2008/11/25/news/economy/paulson_consumer/index.htm?postversion=2008112514

Where did you here of the date the Feds will begin buying MBS? Do you have a link?

You may be right about interest rates getting lower, but your most accurate prediction is,

“(for the smaller pool of buyers who can qualify for loans)”

I have no doubt that banks will become choosier about who they lend money to, and what figure they accept for house valuation. That has been a steady and reliable trend, only interrupted (barely), by the mandated creation of Conforming Jumbo loan amounts (locally between $417K and $506K).

A borrower should VERY carefully consider the benefits of taking advantage of a good opportunity on the table now, rather than wait for a potential opportunity later.

As long as not too much money is invested in acquiring today’s low rate, it may be better to take it now, and refi again if your predictions come true (and if the borrower would still qualify).

The home owner is ahead of the game as soon as they stop paying the higher interest on their existing mortgage. There would be no need to wait for a rate that isn’t here yet…plus, if they refi using a “no cost” refi and if rates continue to go down to the 4% range–then they are still ahead.

Rates are going to keep plummeting as we enter a massive deflationary cycle (i.e. where all asset prices fall in relation to the dollar), so rates will just get better and better (for the smaller pool of buyers who can qualify for loans) in the 3 to 5 years.

By the way, I have a podcast on why mortgage rates will keep going lower at http://msurkan.podbean.com.

I can only do this because I have the sort of FICO score that can withstand many credit inquiries and such. Otherwise, I’d probably have to wait a few months before I could refi.

Also, it helps that my loan is large enough that the cost of the refi can be recovered through interest rate reductions within two years.

And yes, Kary, the difference between the APR of the new loan and the note rate of the current one is about 0.5%. That’s a good test that I hadn’t thought of applying earlier (I was just using the calculations I outlined above.)