"You're going to see an immediate impact on people who can refinance, taking their 6.5 percent interest rate to 5.5 percent or so," said Bob Walters, chief economist of Quicken Loans in Livonia, Michigan. "That will put $200 a month in their pockets."
Almost 20 percent of U.S. mortgage borrowers owed more on their loans than their house was worth in the third quarter as foreclosures depressed prices and the economy weakened, according to an Oct. 31 report by First American CoreLogic. Those owners would have a difficult time refinancing, Walters said.
Local mortgage brokers said they began getting calls immediately from customers once the federal program was announced.
Getting an assurance that the Fed would back Fannie and Freddie securities, "has had that positive effect we all were hoping for," said Hunter Bloch, vice president of Annapolis First Mortgage. He said his office has seen an increase in loan applications.
"Activity was quite rampant yesterday."
Bloch said one of his investors, a bank that buys loans from Annapolis First and other brokers, reported having its biggest day in months Tuesday for locking in interest rates for refinancings.
As of yesterday, Bloch said, rates on 30-year mortgages ranged from 5.25 percent to 5.75 percent.
"If this holds, which we're hoping, I think we'll see an increase in the purchase market," Bloch said. "A lot of people are sitting on the sidelines waiting for the right opportunity."
At Allymac Mortgage in Owings Mills, business for refinancing, which had been almost nonexistent recently, jumped about 500 percent in the last two days, said Neil Sweren, president.
"We've gotten a lot of e-mails and phone calls from people, saying, 'Is this a good time?' " and many are moving ahead with applications, Sweren said. "It seems like everyone that's calling knows that from past experience, the window is usually not open for very long. In this market, people have a heightened sense of how important timing is."
Bloomberg News contributed to this article
