Fred Fans Mortgage Rate Discussion

AITOOW doesn't understand why they are saying mortgage rates would go up if Fannie Mae and Freddie Mac implode? They take the refuse of the mortgage market. The portion with the most risk. Plus those loans are off the balance sheets of the banks who initiated the loans those two hold. If risky mortgages are not being written then the quality of the loans will improve. Less risk should equal less risk premium attached to the prime and mortgage rates should come down. Now I'm not saying you will be able to get a loan but if you I think you should expect to pay closer to prime as usual because you are a better customer. Banks may try and squeeze more out of their customers to make up their declining profit streams, but, that could be penny wise and pound foolish. They need to rebuild the foundation (with quality low yield assets) before they can think of outperforming other financial instruments. Low mortgage rates to quality customers is the only way to do this. They might even get some re-fi income.