While we wrote last Monday that “Mortgage Rate Stability May Not Last,” it appeared as though it did. Mortgage rates held steady last week as the stock market’s woes “did produce somewhat lower Treasury yields,” which could help mortgage rates trend downward this week.
Mortgage Rates
While there has been ample speculation over whether or not Congress will vote to extend the first-time homebuyer tax credit, yesterday’s announcement by the Federal Reserve to extend their purchases of mortgage-backed securities (MBS) until March 2010 has increased the chatter amongst us and others in the industry that the tax credit might just be extended until the end of March as well.
It Makes Sense
For any potential home buyers out there deciding whether or not to pursue a home loan, this may be your sign. According to the latest issue of HSH’s Market Trends Newsletter, “Rates Still Easing; New Record Low for Conforming,” while some economic news improved last week, Conforming loan rates fell to a new record low.
“Perhaps the week’s decline in mortgage rates and the improvement in stocks was a coincidence, but it was the first week in a while without any major new government initiative to roil the markets.”
The Federal Reserve announced plans yesterday to employ several new and ongoing strategies designed to keep interest rates low and stable for at least the next few months.
We predict that the Fed’s commitment alone to spend up to another $750 billion on Fannie and Freddie mortgage-backed securities could help keep conforming rates stable through year’s end.
