More Housing Woes Loom

credit: jdj150

In even more depressing news for the United States housing market, experts believe that it will become incresingly more difficult to get a traditional mortgage, even for those with a good credit record.

One critical factor in keeping the real estate market together — government sponsored mortgage-backing securities like Fannie Mae and Freddie Mac — is losing ground. Investors are beginning to shun these institutions, leading many to believe that traditional mortgages will become harder and harder to obtain.

For those lucky enough to get a traditional loan, they’re bound to be more expensive. Though mortgage-backed security prices have fallen, yields have risen, making for more expensive, higher-interest mortgages. What used to be a 30-year fixed-rate mortgage at 5.96% has climbed to 6.08%, meaning higher monthly payments for new loan holders.

In addition to loan defaults and delinquencies, other factors combine to make for today’s difficult loan market. Both Fannie Mae and Freddie Mac reported a combined $6 billion loss in the fourth quarter, and financial firm Carlyle Capital announced that it needed more funds to offset the depressed value their loan collateral.

What this all means for the consumer is that there will be more hoops to jump and greater prices to pay. Your loan me be more difficult to obtain and your premiums higher, so prepare now and budget well.

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