30-year loan edged up to 4.40 percent, says Freddie Mac
Mortgage buyer Freddie Mac has said on Thursday that the 30-year mortgage rate increased to 4.40 per cent from 4.39 per cent in the previous week, indicating some stability in the market ahead of the proposed liquidation by the government of two major mortgage firms.
The average interest on the 15-year fixed loan was unchanged at 3.43 per cent. Experts have said that if the plans to liquidate government-controlled mortgage guarantee giants, Fannie Mae and Freddie Mac are implemented, and the mortgage rates are expected to up in the US economy. US President Barak Obama is working on measures to ensure that the 30-year mortgages are widely accessible to the US public, which is not generally available in other countries.
A group of senators in the US congress are set to complete a plan to liquidate Fannie Mae and Freddie Mac (FMCC) and replace the failed bank with a government reinsurer of mortgage securities with private capital. The two firms, which were rescued by a $187 billion taxpayer bailout during the financial crisis, now guarantee 30-year mortgages for generations. Most banks appear unwilling to offer loans for such duration without any backing from the government.
The new plan would require private financiers to accept first-loss position for covering steep losses, according to the draft of the plan. The senators are planning to introduce the plan within this month for the plan to be implemented soon.