Fed's Efforts Pay Off as Mortgage Rates Hit a 5-week Low

Rates on 30-year mortgages dropped below 6 percent this week for the first time in more than a month, reflecting aggressive efforts by the Federal Reserve to cut interest rates to protect the economy from a serious recession.

Freddie Mac, the mortgage company, reported yesterday that 30-year fixed-rate mortgages averaged 5.87 percent this week. That was down from 6.13 percent last week, and marked the first time that 30-year rates have fallen below the 6 percent level since the week of Feb. 14.

Click here for more.

Three Ways to Play the Downturn in Housing

I like this recent article from the San Diego Union-Tribune that outlines three smart and safe ways to play the downturn in the housing market. Take a moment to check it out.

San Diego Rents Up 4% From Last Year

Good news for investment property owners...rents are up, and vacancies are down.

Despite a weakening economy, rental rates in San Diego County are up 4 percent from a year ago, fueled in part by strong demand as fewer people buy homes and mushrooming foreclosures turn homeowners into renters.

A survey of nearly 800 apartment complexes of 25 units or more revealed that the average monthly rent this month was $1,311, up $50 compared with a year ago, according to MarketPointe Realty Advisors, which released its semiannual report. In September, the average rent was $1,291.

Meanwhile, the vacancy rate stood at 3.6 percent, which is about a percentage point less than it was a year ago.

“The rental rate increase is consistent with what we've seen over the last several years,” said Russ Valone, president of MarketPointe. “With people hesitating to go into the for-sale marketplace, they're staying in rentals, so that's keeping the demand up. There's still a limited number of vacant units, so the rental market is not oversupplied; in fact, it remains a little undersupplied.”

Click here for more.

New Conforming Loan Limits

And the magic number is....$697,500!

In a move that could help thousands of distressed San Diego homeowners, the Federal Housing Administration announced that it will raise the limits on mortgages it guarantees from $417,000 to $697,500 within the county.

Mortgage-purchasing giants Fannie Mae and Freddie Mac are likely to soon adopt the same new limits as the FHA. If so, that will greatly ease the national credit crunch for borrowers who need to refinance adjustable-rate mortgages or risk losing their homes to foreclosure.

Government-sponsored Fannie Mae's and Freddie Mac's limit for “conforming” loans is $417,000. Loans below that limit have carried lower interest rates and better terms than larger “jumbo” loans.

Something to rememember: it may not last forever! While the stimulus act will raise lending limits for Fannie Mae, Freddie Mac and the FHA, all of the new limits are scheduled to expire at the end of the year.

Click here to read the entire article.