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THE PRESIDENT: Well, thank you so much for taking time to join us. We are here with a wonderful group of homeowners.
And I think for so many people around this country, the essence of the American Dream is owning your own home, being able to have that piece of property that is yours, that allows you to raise your kids, that represents your single biggest investment. And obviously one of the triggers of the financial crisis and now the economic crisis that we’ve suffered is that because in some areas housing values got way overheated, in some cases you had a lack of regulation that allowed all sorts of complex financial instruments take advantage of homeowners. We have seen a collapse in the housing market, a precipitous drop in values, and that led to a lot of the problems in the financial markets. (Background on Roundtable)
Here’s the good news. At the beginning of this administration we said we are — we were going to tackle directly the problems that homeowners were experiencing and figure out ways in which we could provide them assistance in reducing their interest rates, modifying their loans so that they would be in a position to stay in their homes and reduce their monthly payments. And around the table here you see some wonderful families who have taken advantage of what are now historically low mortgage rates, brought about in part by some extraordinary actions by the Federal Reserve, but also brought about by the housing plan that Tim Geithner and Shaun Donovan helped to design.
What you’ve seen now is rates are as low as they’ve been since 1971. Three-quarters of the American people get their mortgages through a Fannie Mae-Freddie Mac qualified loan. And as a consequence of us being able to reduce the interest rates that are available, we have now seen some extraordinary jumps in the rate of mortgage refinancings.
And everybody here represents families who have saved hundreds of dollars a month, thousands of dollars a year in some cases, and that’s money directly in their pocket. More importantly, what it’s allowed them to do is to consolidate their loans in some cases, reduce the length of their mortgages in other cases. It has given them the kind of security and stability in their mortgage payments that a lot more people can take advantage of.
So the main message that we want to send today is, there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates. That is money in their pocket. And we estimate that the average family can get anywhere from $1,600 to $2,000 a year in savings by taking advantage of these various mortgage programs that have been put in place.
We’ve already seen a substantial jump — 88 percent increase in refinancings over the last month. We’ve seen Fannie Mae refinance $77 billion of mortgages in March, which is their highest volume in one month since 2003. And rates on 30-year mortgages have dropped to an all-time low of 4.78 percent.