The U.S. Treasury and the Federal Housing Finance Director placed Fannie Mae and Freddy Mac under conservatorship, preventing what could have been a major financial disaster. The banking market is already responding well to this news, with BankRate showing 30 year fixed mortgage rates down nearly a half a percent over the last week.

Industry experts predict the risk spread between treasury bond yields and U.S. fixed mortgage rates to continue to contract, as the government stepping in erased much of the mortgage investment risk. Does that make now a good time to refinance your mortgage? Many homeowners are already doing so - refinance applications jumped 15% this week, but a Bloomberg news story states that rates may continue to fall

Mortgage rates dropped this week in reaction to the federal seizure of the mortgage giants, Keith Shaughnessy said. He’s advising borrowers who want to lock in a rate to wait if they can because they’re probably heading lower.

Is now the right time to buy a home? If rates are headed lower waiting it out might save you a few dollars, especially when you consider

• the economy is entering a recession
• housing inventory is significantly above historical averages
• millions of homeowners are under water (owing more than their house is worth)
• in spite of the drop in home prices, home prices are still significantly more expensive than they have been historically - when comparing rent vs buy prices, or comparing median income to median home price