Lending Landscape - December 20, 2007

The lending landscape hasn't made itself any clearer in the past week, though interest rates did slightly increase. Much discussion about bailouts for homeowners with adjustable rate mortgages has taken place, but the outlook is still unknown. The Treasury Department has come up with a plan to freeze interest rates for certain borrowers facing increased mortgage payments. As a result, Fannie Mae and Freddie Mac have increased their lending standards for borrowers who would have been considered "prime" in the past.

FHA Reform is finally moving forward. The Senate approved a plan to make it easier for home buyers to get the government backed loans. However, debate between the House and Senate for a final version to be signed by President Bush has yet to take place.

All this activity still leaves us wondering how the lending markets are going to shake out. News on Wall Street has evened out a bit which has pushed mortgage rates up a tad.

Strong reads on inflation and retail sales led to a slight lift in mortgage rates this week, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.14 percent for the week ending Dec. 20, from 6.11 percent a week ago.

At this time last year, the 30-year fixed-rate mortgage averaged 6.13 percent.

For new home buyers with down payments of 5% and credit scores above 680, getting a loan is still business as usual. Everyone else is in a major "wait and see" position.