Here we go again.  The Federal Reserve along with Treasury Secretary Paulson, announced that there would be an additional $600 billion pumped into the economy to buy up mortgages and to bailout the banks.  The plan is to purchase $100 billion worth of Fannie and Freddie debt.  An additional $500 billion would be used to purchase mortgage backed securities which are in essence pools of loans (both good and bad) that were rolled together and sold to investors.  The mortgages that the government intends to buy are NOT the toxic mortgages we’ve all been reading about.  They intend to buy quality mortgages.  This effort coupled with Treasury’s plan to deal with consumer debt (with an additional $200 billion) could be a one two punch that might increase confidence, something that has been seriously lacking in the market for the last 18 months.

How does this move affect the Florida mortgage market?  Well, the move is an effort to offer liquidity to lenders holding the paper that they intend to buy up.  The outcome from such a move should make credit more available for those looking to purchase properties and should also lower Florida mortgage rates.  Of course the question still remains, will banks get back to lending with this additional bailout?  Thus far, we have not seen a lot of movement on the part of the banks to make money more readily available.  Will focusing in on mortgage securities (something Paulson had at first rejected) be the catalyst to see rates fall and to get the real estate market moving again?  That remains to be seen.  Banks seem to be taking a fairly tepid approach to all of these various bailouts.  If this new infusion of cash into the system does stir the Florida mortgage (and national mortgage) market, the evidence will be fast coming.  Prices on homes around the state are low in relation to their highs.  If money becomes both cheap and readily available, we could see an obvious turnaround in the coming months.  We still have the holidays to get through and people seem to be focused in right now on what they can and can’t afford to do on that front. 

Still, smart shoppers are looking for signs of recovery and trying to time the Florida market.  The Southwest coast (Ft. Myers) has seen prices decrease to the levels of ten years ago… at the same time, they’ve seen sales improve 78%.  It is obvious that a bottom is fast approaching.  Will lower Florida mortgage rates translate into brisker sales and a new boom?  We’ve seen it happen before and it could happen again… although I’d hope we’d all be a little smarter about it this time. 

Keep an eye on our Florida mortgage rates and remember that we are always available to answer your questions 7 days a week.