Muthu, I think you are referring to a the rumored Treasury Department proposal that would cut mortgage rates for new loans for homes through Fannie Mae and Freddie Mac with rates as low as 4.5%. Like many plans for solving the housing/credit crisis, they first get politically scrutinized by "leaking" them to the media anonymously. This particular plan has not really gained any "traction" as viable - for now, who knows what the future may bring...
â€œFinancial expertsâ€, newscasters, and business reporters routinely bring up the 10 Year Treasury and Fed Funds Rate as a barometer for mortgage rate direction; however, the 10Y and Fed Funds Rate (the FFR does effect 2nd loans tied to Prime Rate) have nothing to do with the determination of first mortgage rates.
This chart shows that the 10Y has a poor correlation to 30Y conforming rates:
The faint correlation you see stems from the fact that Treasury Bonds are guaranteed by the US government. Conforming loans typically pay a slightly higher return than Treasuries, but are not guaranteed.
The ONLY accurate barometer for mortgage rate trending is Mortgage Backed Securities a.k.a. Mortgage Bonds - period. Make sure you are not working with someone who has his or her eye on the wrong information.
Please see: http://docs.Steven-Anthony.com/SAR-HowMortgageRatesAreDeterm
There is ONLY ONE WAY to accurately know what a 30Y rate would be for YOUR purchase and that would be obtaining a Pre-approval - not a Pre-qualification. There is a big difference. If you have not been pre-approved I can do this for you, as I am both a Realtor and Mortgage Banker. Please make sure you are aware of the differences by visiting the link below.
There are a number of variables that influence your obtainable rate. See pg 2 of the link below for a list of these 25 items and more useful facts about mortgage rates).
Steven A. Ornellas, GRI, ABR, e-PRO, CMPS, RE Masters, MBA
REALTORÂ® / Mortgage Banker-Broker / Certified Mortgage Planning Specialist
Steven Anthony Real Estate & Financial Services
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