Mortgage Rate Indicators for Denver
With the announcement that the FED will "scale back" it's purchases of Mortgage Backed Securities (MBS's) by early 2010, comes the question, what will happen to rates???
Real Estate markets across the country have benefited all year long from the artificially low rates available because of these mortgage backed securities being bought up by the FED, $1.25T worth. As this "rate intervention" is brought to a close, there is strong expectation that we will see interest rates start their upward trend.
Below are this week's mortgage rate indicators which may have an impact on interest rates.
Market Comment - Week of December 21st, 2009
Mortgage bond prices rose last week pushing mortgage interest rates lower. Rates initially spiked higher following higher than expected producer price index figures. Fortunately the consumer price index showed tame inflation on the consumer level and mortgage bonds were able to recover. The Fed kept rates unchanged, indicated they would try to keep rates low for some time, but also warned that long term security purchases would cease at the end of Q1 2010. For the week interest rates fell by about 3/8 of a discount point.
The Federal Reserve left interest rates unchanged last week as expected. The remarks were mixed and caused some mortgage market uncertainty. The Fed statement indicated, "subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets."
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