Mortgage Markets Improve

By
Real Estate Broker Owner with The Condo Guy
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Fed Funds Rate 2006-2012Mortgage markets improved last week as the Federal Reserve introduced new economic stimulus. The move trumped bond-harming action from the Eurozone, and a series better-than-expected U.S. economic data.

The 30-year fixed rate mortgage rate dropped last week for most loan types, including for conforming, FHA and VA loans. 15-year fixed rate mortgage rates improved, as well.

Mortgage rates are back near their lowest levels of all-time.

Last week's main event was the Federal Open Market Committee's sixth scheduled meeting of 2012. Wall Street expected the Fed to launch a third round of quantitative easing (QE3) after its meeting and the nation's central banker did not disappoint.

It launched QE3 and did so with such scale that even Wall Street was shocked.

The Federal Reserve announced a plan to purchase $40 billion monthly of mortgage-backed bonds indefinitely, a move aimed at lowering U.S. mortgage rates in order to stimulate the housing market which can create more jobs in construction and other related industries.

The Fed will continue to buy mortgage bonds until it deems such purchases no longer necessary. The Fed also announced a commitment to holding the Fed Funds Rate in its current target range of 0.000-0.250% until mid-2015, at least.

Mortgage rates responded favorably to the stimulus, falling to their lowest levels of the week. It masked a rise in rates from earlier in the week tied to the German court's clearing of the European Stability Mechanism -- the Eurozone "bailout fund".

The action clears the way for debt-burdened nations including Spain and Greece to get the support necessary to remain solvent.

Mortgage rates were also pressured higher by a strong consumer confidence report. When consumers are more confident in the economy, they may be more likely to spend and consumer spending accounts for more than two-thirds of the U.S. economy.

This week, mortgage rates face competing pressures. The Fed's bond-buy has started and that will lead rates lower, but with Housing Starts and Existing Home Sales data set for release, data could pull rates up.

posted by Bill Desautels
P: (802) 655-9100 (800) 639-4520 x217 F: (802) 655-0400 E: condoguy@condoguy.com
The Condo Guy - Vermont condo real estate
The Condo Guy has been providing advice to buyers
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Rainmaker
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Gita Bantwal
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel
RE/MAX Centre Realtors

Thanks for sharing the news. I hope rates will stay low this Fall.

September 18, 2012 04:48 AM
Rainmaker
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Chris and Dick Dovorany
Broker/Associate at Premiere Plus Realty
Homes for Sale in Naples, Bonita Springs and Estero, Florida

Great blog.  I recently heard that rates are SUPPOSE to be low for the next 5 yrs.  We should take this 1 day at a time.

September 18, 2012 06:11 AM
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Vermont Real Estate Industry and General information. Specializing in condo real estate and home sales.