While the debate rages in Washington about the legislation to support the United States financial system, some important good news for Wisconsin home buyers has been overlooked.
Mortgage interest rates, which reached a five-year high this summer of over 6.60% for a thirty-year fixed loan, have fallen dramatically. Home buyers with a good credit history can now obtain a thirty-year fixed loan for under 6.00% – making new homes more affordable for Wisconsin buyers.
The decline in rates, despite the turmoil on Wall Street, in many ways is attributable to the government takeover of Fannie Mae and Freddie Mac. The rescue plan has provided stability to the mortgage markets and changed an implicit to an explicit government guarantee of the debt for both entities. This removed much of the uncertainty about the future of both enterprises – uncertainty that was reflected in the form of higher interest rates.
As mortgage interest rates have declined, more and more home buyers are taking advantage of the opportunity to purchase a new home. Lower interest rates, coupled with home prices that have stabilized, have people taking advantage of the buying opportunity found in Wisconsin’s real estate market.
There will be much debate about Fannie Mae and Freddie Mac as well as the role of government sponsored enterprises (GSE’s). Some argue that Fannie Mae and Freddie Mac should be made smaller and fully privatized so they never again risk being too big to fail. Some argue that they should be retained as a government entity with a carefully defined role of guaranteeing private providers of mortgage credit and not competing with the private sector. That is a debate for another day.
However it is ultimately decided, this much is true: the steps taken by the government to take over these institutions have stabilized the mortgage markets and caused a reduction in interest rates. This is some welcome news for home buyers.
To begin searching for a new home in Wisconsin or to learn more about Brookstone Homes, please visit www.brookstonehomes.com
