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US mortgage rates still too high



Country:  United States

23 December 2008

Americans are not reaping the full benefit of record low yields on Treasuries and government-supported mortgage bonds, according to the Mortgage Bankers Association.

Although association data shows that the median rate on a fixed 30-year mortgage has fallen to 5.18% from 6.47% in October, the historical relationship between home loans and mortgage bonds shows rates are still around 0.5% too expensive.

Close to US$6.7 trillion (£4.54 trillion) of home-mortgage bonds were outstanding on September 30, with around 70% of those mortgage bonds guaranteed by government-chartered Fannie Mae and Freddie Mac or federal agency Ginnie Mae, according to Federal Reserve data.

Over 100 mortgage companies have failed since the start of 2007.

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