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Market News - March 21, 2008

      
    
        Mortgage rates had been climbing since mid-February as investors turned away from securities backed by traditional loans issued by Fannie Mae and Freddie Mac. This market had remained fairly stable throughout the mortgage meltdown, which started last summer and made it much tougher and more expensive to get subprime and jumbo mortgages.

But even traditional mortgages became costlier after investors started to question the value of these agency securities when Fannie and Freddie reported a combined $6 billion in losses last month. Then, financial fund Carlyle Capital announced its lenders wanted more money to make up for the depressed value of the agency mortgage-backed securities Carlyle had put up as collateral for loans.

In the past week, the Federal Reserve worked to calm the markets by taking a series of steps, including allowing investment banks to borrow funds and put up mortgage-backed securities as collateral. Also, it backed JPMorgan Chase's fire-sale purchase of Bear Stearns and cut the interest rate by three-quarters of a point. Finally, regulators enabled Fannie and Freddie to invest more in mortgages by lowering the amount of capital they have to hold as a reserve against potential losses

 

Today's Rates
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Product              Rate              APR
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3/1ARM                          *4.875%               *4.953%
 
5/1 ARM                         *5.375%               *5.453%
 
30 Yr. Fix.                       *5.625%              *5.703%
 
*Rate is based on 20% down payment
*APR is based on $250,000 loan amount