Big Test Ahead for Mortgage Market
The cessation of the government program to buy mortgage-backed securities, set to end in a couple of months, will show whether the White House and Federal Reserve have effectively stimulated the lending market to the point that it is now on solid footing.
If the sector slumps again, home owners could face a new period of distress.
Keeping mortgage rates at record lows was a major component of the economic strategy during President Obama’s first year in office. While it did not garner the kind of headlines that efforts to bail out banks did, the policy did help revitalize home buying in parts of the country and assisted millions of home owners who were able to refinance.
Source: Washington Post, David Cho, Neil Irwin, and Dina ElBoghdady (01/25/10)
© Copyright 2009 Information Inc.
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.
Fed: It’s Time the Market Stands on its Own
April 1 will be the first day that the Federal Reserve will end its debt purchase program and allow the struggling U.S. mortgage market to operate unassisted. As a result, the Fed believes mortgage rates will rise about three-quarters of a percent to about 6 percent, Boston Fed President Eric Rosengren said Saturday.
Fear of a worldwide perception that the U.S. government is simply printing money to use to purchase mortgage-related securities is a big reason the Fed has pulled back, analysts say. If that fear caused a sell-off of U.S. government bonds, it would push borrowing costs substantially higher and derail the economic recovery.
“We are still in uncharted waters,” Fed Vice Chairman Donald Kohn said in an unrelated speech Saturday. “We will need to be flexible and adjust as we gain experience.”
Source: Reuters News, Pedro Nicolaci da Costa (01/08/2010)
Front Gate Properties, We’re selling the BEST Real Estate in Aiken, SC.