Two weeks ago I suggested that homebuyers be ready to act swiftly if mortgage rates dipped, since most experts are predicting that rates will remain on an upward trend as we look forward. I hope you potential homebuyers out there were listening because mortgage rates did ease last week, and current market conditions have made things quite affordable.
After reading the title of this post you may be saying to yourself, “Why would I want rates to rise?” Don’t get us wrong, historically-low mortgage rates have been one of the only things keeping the housing market moving. However, these rock-bottom rates are also an indication of just how poor things are, economically speaking.
That said, mortgage rates trended downward once again last week: Read the rest of this entry »
Last week the Federal Open Market Committee (FOMC) announced that they “will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.”
While that sounds like a technical mouthful, in essence it simply means that the Fed will re-continue a program that’s aimed at keeping long-term interest rates (e.g. 30-year mortgages, 10-year Treasuries) low for an extended period.
After the conclusion of the Federal Open Market Committee’s (FOMC) one-day meeting on Tuesday, the Fed announced measures that will help serve to keep mortgage rates low if need be:
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.1 The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.
Update1: The Wall Street Journal thought our guest post on FiveCentNickel.com was worth the read — be sure to check it out if you haven’t already.
Original post (published on 2/3/10): I was given the opportunity to write a guest post for the popular personal finance blog FiveCentNickel.com. I decided to write about what HSH.com knows best: mortgage rates.
“As expected, the recent slide in mortgage rates came to a soft halt [last] week,” according to the latest issue of HSH.com’s Market Trends Newsletter. As stated in the release immediately following their two-day meeting, the Federal Reserve maintained that their MBS purchase program would end as planned on March 31, 2010. Despite the fact that many (including us) foresee a legitimate rise in rates when that program ends, rates held steady for the most part:
[Last] week, the overall average for 30-year fixed-rate mortgages tracked by HSH.com’s FRMI rose by a single basis point (0.01%) to 5.42%. The FRMI includes conforming, jumbo and the GSE’s “high-limit” conforming products in its calculation. It also has a Hybrid 5/1 ARM counterpart, which shed six basis points during the latest survey cycle, landing at 4.59% for the week. Conforming 30-year fixed mortgage rates eased by a couple of basis points while jumbos moved a like amount upward.
Good morning everyone. Since there are several important developments currently underway that are likely to impact you directly, I thought I would do things a little different this morning. Instead of writing separate posts on each development, we’re going to delve a little into each. Each of the following are likely to impact not only the housing markets but the overall economy as well.
Fed Leaving the Mortgage Market?
Just in case you missed one of our stories from the past week, here’s our weekly recap.
Today:
“Mortgage Rates Creep Upwards“: The Conforming 30-year rate crept past the 5% mark for the first time in a month.
“Update1: Citi, Fannie, Freddie Delay Foreclosures for the Holidays“: One last holiday at “home.”
The Federal Open Market Committee (FOMC) ended their two-day meeting today the same way they have been for months now: keeping the target for the Fed funds rates between 0 and 0.25%, and claiming that the economy continues to recover, albeit very slowly:
Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.
Minutes ago, the Federal Open Market Committee (FOMC) released a statement following their two-day meeting, which solidified most of, if not all, analysts’ expectations.
MBS/Debt Purchases Extended
Perhaps the biggest development was that the Fed announced that they will ease their purchases of mortgage-backed securities and agency debt by the end of the first quarter of 2010, not by year’s end as previously stated. Conforming rates should remain low for a while yet, but the Fed’s reduced demand might serve to nudge rates up. The decision to push their exit strategy back signals that private markets may not quite be ready to operate on their own by December.
HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.
