The week in review:
The Fed is by far the 800 pound gorilla of the financial markets. At their scheduled meeting on Wednesday, the Fed indicted that “economic conditions warrant exceptionally low levels of the Federal Funds Rate” and they would continue their plan to purchase mortgage-backed securities to help the mortgage and housing markets.
So, with such bold statement, what did home loan rates do last week as a result? They went up.
The markets were looking for a more detailed action plan and concerns over the new stimulus package caused rates to move up about .25%.
What to expect:
Just about every bit of economic news last week would have generally caused home loan rates to go down. However, the Feds actions will continue to direct the markets. Interest rates are about .50% higher than the lows a few weeks ago.
While we feel rates have the possibility to come down from this point, we are also advising that homeowners and homebuyers not wait around for the elusive 4.50% that seems to be a favorite figure of the media. There are many reasons to believe we may not ever see the 30 year fixed that low.
Breg-ometer:
Next 7 days: Volatility continues.
Next 30-60 days: Fed more aggressive = lower rates; Fed same or less aggressive = unchanged
Courtesy of:
Bob Bregitzer
[where: 30080]
I hope the program the fed is doing goes through somewhat as proposed for mortgages. I blogged about it back in October and hope the fed would borrow on Treasuries and lend out through the agencies Fannie and Freddie to get people back in the market. The availablity of mortgages is starting to open up since they have been buying paper.