Ding, Ding, Ding………………round 2 says the Fed. Yes this is round 2 by the Fed to print real cheap money (almost free) $600 Billion worth to buy our debt in the form of U.S. Treasury Bonds. How does that work into the mortgage market and interest rates? How the FED lowers mortgage rates is by printing more money, this typically causes the interest rates to go down. Also when there is a lot of people buy U.S. Treasury Bonds then simple economic supply and demand takes hold which keeps the mortgage rates down. The reason for this is the 30 year fixed mortgage rates are usually hedged by the 10 year treasury notes. This is mainly because, on average, a mortgage will only last 7 years until it changes again, either by refinance or person selling their house and getting another one.
continue reading »
When markets are on very shaky ground, everyone hangs on the way sentences and wording come out of Fed Chairman Ben Bernanke’s mouth. So of coarse since he is talking later on this Friday, all eyes are on his mouth, well at least the words coming out of it. Here is what CNBC has to say about what might take place, hope you enjoy 
http://www.cnbc.com/id/38872170
Bernanke Speech to Set Market Course Friday and Beyond
Published: Thursday, 26 Aug 2010 | 9:30 PM ET
By: Patti Domm
CNBC Executive Editor
continue reading »
After the Fed’s two day meeting it is expected that they will continue with the language for keeping the rates low for “an extended period”. This is the over night rate that the banks get charged for using money and that are at near zero rates. What does this mean for mortgage rates? Well, there are many different factors that make up the movement of the mortgage rates just like the treasury note auction and any other items like employment and general markets. The Fed will give their announcement at 1:15pm CST. Below is an article that talks a little bit more about Fed’s meeting and the market. Hope this helps
Fed Set to Renew Promise of Continued Low Rates
continue reading »
In politics, financial markets, and real estate the only true constant is change. Ever since November I have been warning about the FED’s stimulus program ending March 31st of 2010 and that would be a factor in making rates jump up a little bit. Sounds like that might change depending on how the politicians roll the dice on this and how our economy is looking. The article below touches on this just a little bit, but only time will truely tell what will happen in the future. Hope you enjoy this and as always, have a glorious day!
continue reading »
The FED will most likely announce today after their two day meeting they will leave the over night rate unchanged currently at 0 to .25%. The overnight rate is the going rate at which the FED charges banks for borrower money. So now looking back at any of the banks quarterly earnings, if they can borrower money at 0 to .25%…..lend it at 4.5 to 5.5%…….that is a pretty big profit. Further story at CNBC.com
All the eyes though on this announcement are more aimed towards the wording, is the FED planning to raise rates sooner or later? There has already been the announcement of the FED to stop Treasury buying (the United States debt) so that might be one impact on interest rates. They announced this would take place at the end of the 1st quarter (March). Depending on the direction they want to give, raising of the over night rate must come sooner or later. There is a lot going against the rates being this low…..dollar devaluation, but there is a lot going against raising them, JOBS, real estate, lending.
Hope this helps
Always interested in your comments, so feel free to contact me.
I wouldn’t consider myself an economist, but I did take economics 101. Remember learning about this thing called supply and demand. Currently, the United States is printing money for free….or should I say 0% to .25%…..that is the overnight rate currently. The government has also increased borrowing which means we sell that debt off and the top 3 holders of our debt are:
1. Federal Reserve and Intragovernmental Holdings 4.785 Trillion (March 2009)
2. Mutual funds 769.1 Billion (U.S. Treasury securities)
3. China (mainland) 776.4 Billion
Now, it has been announced that the FED will start to pull back from buying Treasury securities sometime around March 2010. Economics 101, if demand for these go down then price will go up and that means interest rates. The problem though with predicting anything in the financial market is that it is never just that ONE item that causes movement. There are a lot of other factors that will cause interest rates to change, and this is just one of those causes.
Will interest rates go up tomorrow, next week, next month, next year……..that is very tough for anyone to predict and if someone can……..they would be on an island somewhere they own and not telling other people of their predictions.
What I will leave you with is this; The FED can’t keep giving away money at 0% to .25% and will have to raise the overnight rate and protect the weaking dollar. Historically when rates are low and the dollar is weak, rates raise and in my opinion the reason they have been kept low for this long is to help get America back on its feet.
That is why it is important to take steps now, and find ways to reduce the amount of debt you have.
www.jasonwroble.com “Taking a bite out of your biggest debt, YOUR MORTGAGE!”
Oct3
I sound like a broken record about this $8,000 tax credit for 1st time home buyers, but November 30th is right around the corner and if you were ever just thinking of buying…….NOW IS THE TIME.
Let me give you two reasons:
1. $8,000 tax credit ……….you could get this money!!!
2. Rates are pushing an all time low record. If you are waiting for them to get lower……DON’T!!!!
Have you ever heard of a person buying a stock buy at the excact lowest price of that stock…….NO! If a person did, then it is like them winning the lottery. The FED can not keep printing our money for FREE (over night rate is 0% to .25%) and from the sounds of it, looking to start pulling back buying treasury notes in the 1st quarter of next year. What this means is when the Treasury stops buy the governments debt……….RATES GO UP!!!
I can assist you nationwide and Puedo Asistirle en espanol!
With my network of trusted individuals within the housing industry, allow me to be a person who is a one stop person for any of your home buying needs. If you are needing a mortgage on your purchase, or the refinancing of your mortgage start by sending me an email or give me a call now.
