A lot has changed since December 2009 when we wrote both our last two-month forecast and our 2010 Outlook for mortgage rates. We decided to delay the release of the February two-month forecast in order to give us some more time to consider the changes that were and still are forming in the mortgage market. Although delayed, we have published the latest Two-Month Forecast for Mortgage Rates.

At the dawn of the new year, the Fed was slated to move forward with their plan to end their mortgage-backed security (MBS) purchase program on March 31, 2010 — a plan that for nearly 16 months drove mortgage rates down to record lows. At that time, there was no other plan in place to pick up where the Fed’s plan would leave off. However, a lot has changed in three months.

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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.

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We couldn’t agree more with John Canally, an economist at LPL Financial, when he said that the Fed is walking a pretty narrow tightrope in 2010.

The Fed’s decision to purchase Fannie and Freddie mortgage-backed securities (MBS) has been extremely successful at lowering conforming mortgage rates to 50-year lows, and driving potential buyers into the market.

But what makes the Fed’s tightrope especially narrow in 2010 is that the program is due to expire in the next few months — and there’s dissension in the Federal ranks over whether or not to extend it.

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