Mortgage rates falling second day in a row, but that won't help at all.
MIAMI -- mortgage rates fell for the second day in a row Wednesday, and could be heading toward levels home buyers and owners haven't seen this year. The credit markets, while not as crunched as they were last week ahead of the rescue of Citigroup Inc. and the Federal Reserve's plan to buy $600 billion in mortgage-backed securities, are still in rough shape because financial institutions and other investors remain wary about lending. Short-term Treasury rates remain just above zero _ suggesting a high level of fear among investors.
"You're seeing modest, ever so modest, easing in credit conditions. But you can't declare victory when the patient on the deathbed goes to critical. It's still dire," said T.J. Marta, fixed-income analyst at RBC Capital Markets.
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There are several questions facing potential lenders right now that are hindering them from making loans: Which borrowers are creditworthy right now? How much worse will the housing market get before it rebounds? How much will other kinds of loans deteriorate?
With no definitive answers yet to these questions, confidence remains extremely low, despite the government's huge injections of cash into the markets to keep the entire system from collapsing outright. And no one knows for sure when or how that confidence will be restored.
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