How have Fannie and Freddies troubles over the past year affected mortgage rates?
As the companies’ troubles mounted, investors demanded artificially higher interest rates, said Guy Cecala, publisher of Inside Mortgage Finance. “They required a higher yield to buy the securities,” he said. For years, mortgage rates closely followed U.S. Treasury bonds, but they fell out of sync as foreclosure losses mounted, Cecala said. Absent the problems surrounding Fannie and Freddie, rates for the typical 30-year mortgages would be about 5.5 percent or lower; current rates are more than 6 percent. //’) ; // –> //]]> //With the government backing, investors are likely to see investing in mortgages fall back in line with investing in U.S. Treasury securities, analysts said. When can we expect mortgage rates to drop? No one knows for sure. It could take a day, a few weeks or a month for the takeover to affect rates, analysts said. It may depend on whether the housing market improves, said James Sahnger, vice president of Palm Beach Financial Network of Stuart, Fla., which tracks
