| Bleak home forecast until 2010 / Freddie Mac economist: 'likely to have worse news'
- The home foreclosure rate will rise for at least another year and residential real estate prices won't improve until 2010, said Frank Nothaft, chief economist for Freddie Mac, a federally chartered mortgage finance company. "We're likely to have worse news" on foreclosures throughout 2008, Nothaft said Thursday in a speech to the National Economists Club. As a result, homeowners will see "huge increases in the average amount of time it takes to sell a house." With so many properties sitting on the market, families that want to move before 2010 will find that "it's a lot harder to sell a home," he said. "It'll take some time to wear down this inventory." He predicted prices will improve in about two years. Since the housing market's peak in 2005, existing homes sales are 29 percent lower nationwide, he said.
More long-term mortgages available
The number of long-term fixed rate mortgage deals available has increased during the past year, but consumers are paying more for them, figures show. There are now 132 mortgages available that are fixed for 10 or more years, accounting for 11.5% of all fixed rate home loans, compared with 112 or 8.9% of fixed rate deals in April 2007. The increase in the number of long-term deals available comes despite a two-thirds drop in the overall number of different mortgages available due to the credit crunch. But while the number of long-term fixes has increased, so have the rates lenders are charging for them, despite the Bank of England base rate being at 5.25% both now and in April 2007. Homeowners wanting to fix for 10 or more years are now paying an average of 6.14%, rising to as high as 7.59%, compared with an average rate of 5.89% a year ago.
McCain Rejects A Quick Fix For Mortgage Crisis
Santa Ana, Calif. — Drawing a sharp distinction between himself and the two Democratic presidential candidates, Sen. John McCain of Arizona warned Tuesday against vigorous government action to solve the deepening mortgage crisis and the market turmoil it has caused, saying that "it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers." McCain's comments came a day after Sen. Hillary Rodham Clinton called for direct federal intervention to help affected homeowners, including a $30 billion fund for states and communities to assist those at risk of foreclosure. Clinton's Democratic opponent, Sen. Barack Obama, has similarly called for greater federal involvement, including creation of a $10 billion relief package to prevent foreclosures.
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