Mathews Associates

"Building Lifestyles for Life"

Central Bankers Divided on Future of Mortgage Purchase Program

Posted by Dwight Mathews on January 12, 2010

Real Estate practitioners, mortgage investors, and even some federal officials have express concern that rates will go even higher when the U.S. central bank stops buying mortgage securities early this year.  According to minutes released this week, of the Federal Reserve Board’s closed-door December meeting, Fed policymakers have already begun debating whether the program should be extended, to ensure the already-fragile housing recovery maintains it’s course, but the decision has left a dividing line down the central bank boardroom.

The Federal Reserve has said it will end it purchases of mortgage-backed securities (MBS) from Fannie Mae, Freddie Mac, and Ginnie Mae on March 31.  Many argue that it’s too soon to end the program, fearing that mortgage rates will shoot up and demand for home purchases will falter.

Over the past year, the U.S. central bank has purchased nearly 75 percent of the mortgages that Fannie, Freddie, and Ginnie have securitized.  It currently holds just over $900 Billion of these MBS bonds, and says by the time the program ends it will have bought a total of $1.25 Trillion.

It’s obvious to me that no matter what they decide,  Mortgage rates are headed higher.  This program also ends about the same time as the extended Tax credit buyer program.  I think between now and March, the Fed’s will once again revert back to bail-out mode in order to keep stability in the market.

All I can add at this point is that if you have been waiting for a more opportune time to purchase a home or Investment property-This is the time to put on your Smart-Savvy Hat and make an offer! Mortgage rates will never be this low again for a long long time.  For a Free Consultation and personal profile valuation please call my office or send me an email.  909.790.8196/

Click below to view the latest  DS. News report!

via Central Bankers Divided on Future of Mortgage Purchase Program.


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