4.5% Mortgages a Possibility?

" Also dealing with an ongoing housing crisis today Republican senators will push to include a proposal of stimulus plan. That would offer mortgage rates of four and a half percent or lower. This warning -- US mortgage applications and demand for refinancing loans jumped last week according to the Mortgage Bankers Association says purchase and refinance loans. Rose nearly 9% after slumping 38 point 8% and the week at war. Want more I'm joined by David like in president of mortgage bank with solutions and warrants -- chief economist for the National Association of Realtors. Good morning gentlemen thanks for being here good morning David let me start -- morning you. 40%. What is that number come --"

" Well that there there's an arbitrary and because we watch home sales drop off in December again. And we've got to do something the economy they addicting congressional leaders have got to do something to stimulate. Home sales that's what led us into this crisis and them. General belief is housing will lead us out of this crisis."

" Still Lawrence who would be qualified I guess to receive one of these four and a half percent mortgage is either through. We finance activity or by going on purchasing new home."

" It should be available to all four people who want to refinance so they're far. Overall family balance -- improves I think they'll be very helpful affordable for buyers what is the first time buyer. A tornado fighter he should be available because what we need to address currently is the fundamental source of economic problem and that's the housing market downturn. If Ford can get the housing market could turn around then the overall economy can recover in a sustainable way. Now we can talk about other effect there's -- there'll be more but short term. This stimulus not a long term sustainable because we have to get the home prices to stabilize across the country. In order to -- that give the consumer confidence back into the market."

" But did -- I'm standing you actually think that the best way to do some of the things that Lawrence just talked about. Was actually did take the rate down to form a quarter eat or even as low as 4%. What the difference between that quarter or half a point why even make such a big difference. Well it."

" It works tragedy comes to consumer confidence thing there's nothing magical -- about that particular interest rate but it it will have achieved. An all time almost an all time low I've been trying to do is a research report came on here -- see what is the historical lows but certainly from here's what I can be able to fell forty to fifty year lows. Will be attained if we can get down into the low force but more importantly if you start look yeah -- especially in the refinance area and agri. Where the they keep economist comment that we need to get everyone included in the plan. Because if we can drop interest rates I went -- district look at where the average rates aren't they been over six and a half percent a lot of consumers are still stuck to the six and a half percent interest rate. If we can drop down to thwart a quarter someone with a 150000 dollar mortgage payment schedule I did enjoy a significant. And right have raised at -- and I think you'll get across the board if you're injured at Obama go up Lexus. This is real money and you want to talk about a stimulus on a month to month basis. That does not have. Economic negative over economic impact. This is exactly what is the stimulus we need for all consumers --"

" More people ask you questioned one of the things it's been discussed out there is a certain level. I guess a ceiling you would argue. For conforming loans that in this situation would be purchased by Fannie and Freddie. And that conforming loan limit has changed over the past year to include certain markets across the country. Is the expectation here that this would be capped out. At 475000. Or the current limits and which are about 625650. We do we know how high and bid loan amount could be given a new rates."

" You look at somewhat higher I think I he's going to go up to seven 730000. Or some -- the high calls will be done there will be some local market variation. But the loan limits needs to be raised because we are looking at. This was successful Americans hard working Americans taxpaying Americans who just want to buy more higher priced home yet they're getting punished on high interest rate. Still we know that to have more wider availability of low rates two more people we need to raise the long and as for the Fannie and Freddie can participate on the high you know the market as well rightly lonely and on the."

" So Lawrence -- mad because a lot of people we've talked to wanted to show -- would have been in a very difficult situation because their -- falls into that Jumbo category is you know. Jumbo loan rates have been not coming down nearly as much as conforming loans so what we've heard a lot of people -- that they're trying to get a conforming loan in the media private equity -- you know lying on top and then our home equity line. So how do you see that changing the -- that."

" Yeah there's all this financial gymnastics going on because of the long limit the being restrict that which is important to just simply -- says and have more people qualify for the historically low mortgage rates. You know addition to that I am not black and he had offended -- are still talking about home buyer tax credit sold by putting data on the table that. Provide instant equity for home buyers so they would have skin in the game to make the mortgage payments and again we by the housing market and has revived the economy."

" Dana what about sub prime borrowers some of those who don't necessarily need the fight goes score is right now why did they get hurt in this program."

" Well yeah I had at this point Alexis -- been boxed out of the market because of the programs have been -- that underwriting criteria. Has been restricted so severely that the previous sub prime borrower is for the most part been locked out now some in the industry are saying well we still have had programs. And some of the sub prime borrowers will in fact and they do qualified for some Hud programs. The problem though -- this is is the ones where they're they they're. Upside down on the property we have three problems in the industry that are really even if we get the rates down of the 4%. We have credit collateral and capacity we're seeing people's credit reports being impacted by de leveraging and that's a whole other topic we do get into. We're seeing property values are falling to the point where those that are in their homes they have -- they're semi up figuring out a way to make the mortgage payment. It cannot get taken -- the lower interest rates got the property values have fallen some but there upside down on that loan. And then here's the biggest issue and they should be there were headlines across the news we have a serious capacity issue within the industry Alexis now we every mortgage banker out there is they're over they've got more business than they can handle and we drop rates -- low. A table and watch lines go out the door to try to refinance your loan."

" Yep but that might be a good thing I mean hi would you will admit that's for sure we need a little excess cash your pocketbooks right now. Lawrence and gave me great pleasure having to be on this morning thank you so --"