Mortgage Rates Drop in Aftermath of Takeover

Long-term mortgages became more affordable this week as the market digested news of the Treasury's rescue plan for Fannie Mae and Freddie Mac. The average rate on conforming, 30-year fixed-rate mortgages declined to 5.93% this week, a decline of 42 basis points from that of last week. It was the first time the average 30-year mortgage rate had dropped below 6% since May. The average rate on 15-year fixed-rate mortgages declined to 5.54%, down 36 basis points from the level recorded the week before. But the rate drop may not spark a refinancing boom. Brian Koss, executive vice president of national production at Mortgage Network Inc., Danvers, Mass., told American Banker, "Most borrowers don't have the equity in their homes or don't meet current guidelines, so a lot of people who want to refinance, can't."