Will there be life in the mortgage market with out Fannie and Freddie? I believe we have not seen the end of Fannie and Freddie just yet. They will probably become what it was meant to be, a place for people of limited means to get a mortgage to buy their homes. There was a time when people got their first home with a mortgage through Fannie or Freddie. It was a place where people would have their credit worthiness seasoned. Timely mortgage payments and proper use of credit could eventually help one to qualify for a larger loans at lower interest rates.
Banks will probably get back into the mortgage market, heck, maybe even local banks will get into the act as well. Take it a step farther, banks might even hold the loans and not sell them in bundles to Wall Street. I mean the concept of banks reinvesting in the local economy is just mind boggling. What was once an old concept…is new again!
But, look for interest rates to be four to six percent higher than the prime rate. Also, look initially to higher down payments, and higher mortgage insurance rates. As competition between banks increase, there could be variations as to down payments and interest rates. There is also talk of the demise of the 30 year fixed mortgage. We may see more 15 year mortgages with a balloon payment at term, or more 5 year adjustable rates mortgages, but, I think we will still see the 30 year fixed rate mortgage.
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