Mortgage News for Livermore Valley

California mortgage interest rates are going to sneak up a notch in the near future, but not for the reasons you might expect. As of October 1, Freddie Mac and Fannie Mae are raising the basis point fees they charge to lenders. In turn, lenders are likely to pass the increased costs on to mortgage borrowers in the form of slightly higher rates.

Freddie and Fannie are making these changes in order for their mortgages to be priced in line with private funding. In other words, they are trying to encourage private capital to return to the mortgage market.  Returning the mortgage markets to balance is in the best interests of taxpayers, who have helped Freddie and Fannie out of some tight spots in the past.

Who relies on Freddie Mac and Fannie Mae for mortgages these days? Almost everybody. In fact, Reuters reports that 85% of mortgages originated during 2011 were backed by these agencies.  So far in 2012, 89% of new mortgages are backed by them. Even small changes by these mortgage giants can have wide-reaching effects.

Fortunately, the dollar impact to Livermore Valley home buyers will be modest. According to Bloomberg, borrowers can expect to pay about $4,000 more over the life of the loan, using a $200,000 mortgage as an example. Break that down per payment, and it’s an extra $11 per month.  Larger loans could see this ratio played out into another $40 a month or so. Not a show-stopper, but remember that these increases are the result of modest policy changes. There are many other reasons why interest rates can rise, and we shouldn’t take today’s rate environment for granted.

The bottom line is, low interest rates and affordable home prices won’t be around forever! Market changes can happen quickly, and buyers who wait on the sidelines too long will miss out on the great opportunities in Livermore Valley real estate. Why not take a look at the wonderful homes available on the market today?

My experience in Livermore Valley real estate will help you whenever you are buying or selling a home! Whether you need the latest market data for Livermore, Pleasanton and Dublin  or you just have a few questions, contact me! I will provide you with reliable, professional guidance throughout all of our market conditions.

John Kurtzer
Your Livermore Real Estate Expert
RE/MAX Accord

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