The Fed'S Interest Rate Cuts Failed To Ease Borrowers' Pressure

According to data released today, the Federal Reserve's interest rate cuts have failed to alleviate the pressure on borrowers of Jumbo Mortgage in New York and San Francisco, where housing prices are the highest in the US housing market.

According to BanxQuote, financial data company, the average interest rate of 30 year fixed rate mortgages of more than 729750 US dollars is still nearly two percentage points higher than the Conforming Loan interest rate, and this interest rate may hit a record high this month.

In December 22nd, the average interest rate of 30 year fixed rate mortgages was 7.32%, while the average interest rate of conventional loans was 5.38%.

According to BanxQuote data, the difference between the average interest rate of the 30 year fixed interest rate mortgage and the conventional lending rate is 2.13 percentage points so far in December, which is 10 times the average spread between 2000 and 2006, higher than the 1.95 percentage point recorded last month.

Over the past year, banks have suffered $678 billion in mortgage related losses and capital writedowns. Meanwhile, housing prices have been falling sharply, making banks reluctant to lend to foreign investors.

According to Keith Gumbinger, vice president of HSH Associates Inc. of New Jersey mortgage research company, the huge mortgage interest rate may fall next year, because more buyers will seek refinancing.

Gumbinger pointed out that the huge mortgage interest rates in New York, San Francisco and Boston may decline next year, because the Federal Reserve Chairman Ben Bernanke (Ben Bernanke) announced in November 25th that the Federal Reserve plans to acquire at least $500 billion of institutional bonds, and will also receive 100 billion dollars of direct debt from lenders, Freddie Mae and major federal housing loan banks.

Previously, the US government has taken many measures to reduce the cost of housing finance, such as takeover of mortgage financing giants Fannie Mae and Freddie Mac in September.

As part of taking over the two companies, the Ministry of finance has announced that it will buy mortgage-backed securities to boost the worst performing housing market in at least 70 years.

According to a report released today by the American Mortgage Bankers Association (MBA), the association's mortgage application index rose to 1245.4 last week, the highest level since 2003, compared with 841.4 in the previous week.

The report shows that the MBA refinancing index has risen by 63%, and the housing index has risen by 11%.

Yang Jing: editor in charge