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Mortgage Loan Rate Uncertainty and Tax Credit Expiration Trouble Housing Experts

Posted by  on Oct 08, 2010
 

Best Mortgage Rates for 50 Years Here to Stay. Or Not.

March 31st is the day that the Federal Reserve winded up a program that has seen it purchase $1.25 trillion worth of mortgage-backed securities (MBS). It was pretty much forced into buying those securities because private investors, who had been spooked by the sub-prime mortgage crisis, wouldn't touch them.

Back in January 2009, when the program was begun, the choice appeared to be between there being no money available for mortgages (imagine the impact of that on an already depressed housing market), and there being public money. But how different are things today?

Mortgage Interest Rates To Rise?

It's widely understood that the Fed's intervention has been a key factor in the country's recent enjoyment of some of the best mortgage rates in half a century. Those who have decided to wind up the MBS program believe that the move will have little impact on mortgage rates because private investors are now ready to step into the Fed's shoes.

However, not everyone agrees. Under the headline, "A Wake-Up Call on Mortgage Rates," The Wall Street Journal reported what it called "an unsettling surge" in Treasury yields, which are closely related to mortgage loan rates, and it tied that to the Fed's withdrawal from the mortgage market.

Current Mortgage Rates to Stay Low?

Others remain more relaxed. Business Week suggested:

The Federal Reserve's completion this week of its program to buy $1.25 trillion in mortgage bonds probably won't mean significantly higher U.S. home loan rates as investors return to the market, replacing the Fed. Fixed mortgage rates likely will rise less than a quarter of a percentage point in the next three months, the smallest increase for the second quarter since a drop in 2005, according to estimates by Fannie Mae and Freddie Mac.

House Price Trends Unsettled

Concerns about the impact of the end of the $8,000 Federal home buyer tax credit program were given an airing in the New York Times. Under the scheme, home buyers must sign a contract on or before April 30, and close by the end of June.

The Times suggests that a recent surge in home sales may be a result of buyers getting in ahead of those deadlines. And it wonders whether the likely effects on house prices of the program ending might justify extending it.

How This Affects You

If you want to take advantage of the home buyer tax credit program, you really have to act quickly. Compare mortgage rates here--and now!

But if you think you're too late for that option, and that mortgage rates and house prices are going to remain low, you can afford to take a more leisurely approach to finding your dream home. Still, there's no downside to getting mortgage quotes here.

Best Mortgage Rates for 50 Years Here to Stay. Or Not.

March 31st is the day that the Federal Reserve winded up a program that has seen it purchase $1.25 trillion worth of mortgage-backed securities (MBS). It was pretty much forced into buying those securities because private investors, who had been spooked by the sub-prime mortgage crisis, wouldn't touch them.

Back in January 2009, when the program was begun, the choice appeared to be between there being no money available for mortgages (imagine the impact of that on an already depressed housing market), and there being public money. But how different are things today?

Mortgage Interest Rates To Rise?

It's widely understood that the Fed's intervention has been a key factor in the country's recent enjoyment of some of the best mortgage rates in half a century. Those who have decided to wind up the MBS program believe that the move will have little impact on mortgage rates because private investors are now ready to step into the Fed's shoes.

However, not everyone agrees. Under the headline, "A Wake-Up Call on Mortgage Rates," The Wall Street Journal reported what it called "an unsettling surge" in Treasury yields, which are closely related to mortgage loan rates, and it tied that to the Fed's withdrawal from the mortgage market.

Current Mortgage Rates to Stay Low?

Others remain more relaxed. Business Week suggested:

The Federal Reserve's completion this week of its program to buy $1.25 trillion in mortgage bonds probably won't mean significantly higher U.S. home loan rates as investors return to the market, replacing the Fed. Fixed mortgage rates likely will rise less than a quarter of a percentage point in the next three months, the smallest increase for the second quarter since a drop in 2005, according to estimates by Fannie Mae and Freddie Mac.

House Price Trends Unsettled

Concerns about the impact of the end of the $8,000 Federal home buyer tax credit program were given an airing in the New York Times. Under the scheme, home buyers must sign a contract on or before April 30, and close by the end of June.

The Times suggests that a recent surge in home sales may be a result of buyers getting in ahead of those deadlines. And it wonders whether the likely effects on house prices of the program ending might justify extending it.

How This Affects You

If you want to take advantage of the home buyer tax credit program, you really have to act quickly. Compare mortgage rates here--and now!

But if you think you're too late for that option, and that mortgage rates and house prices are going to remain low, you can afford to take a more leisurely approach to finding your dream home. Still, there's no downside to getting mortgage quotes here.

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