Eventually, this will affect mortgage rates….
by Tom on October 3, 2009
in Market Musings, Mortgage Rate Updates
It seems weird to be talking about rising rates when we’ve been in a falling rate environment for a while, but eventually the fact that the government is backing off of their purchase of mortgage backed securities will ease it’s way into the mortgage rate market.
Check back on this in 120 to 180 days and I expect we’ll see rates starting to inch closer to the .375% increase that I talked about a couple of weeks ago in the “Why Rates Are Going Up” post.
Keep in mind, this is a long term dynamic, not something that affects the day to day fluctuations of the market (like we’ve seen in the last week).
If you recall from what I’ve written in the last few days about the jobs report and it’s impact on the mortgage market, I’d say that we’re looking at a “small likelihood” of additional easing in the near future but the longer term trend remains higher for mortgage rates.
Tom Vanderwell
NY Fed Slows Weekly MBS Purchases : HousingWire || financial news for the mortgage market
The New York Federal Reserve Bank detailed purchases of $29.1bn of mortgage-backed securities (MBS) issued by Freddie Mac (FRE: 1.66 -4.05%), Fannie Mae (FNM: 1.42 -2.74%) and Ginnie Mae.The Fed’s weekly net purchases brought total net purchases to $904.9bn, according to a securitization research bulletin this week by Barclays Capital (BarCap). Of those net purchases, Fannie represents the largest share (59%), while Freddie represents 33% and Ginnie represents 8%.
Net of $9.1bn sales the same week ending September 30, the Fed’s $20bn of purchases showed a steady decline from $23bn in the week ending September 23 and $25.5bn in the week ending September 16.
The weekly slow-down confirms the Federal Open Market Committee’s (FOMC) report that the Fed is on track to buy $1.25trn in agency MBS, and intends to wind down the purchasing program before its anticipated conclusion at the end of Q110.
Technorati Tags: Mortgage Backed Securities, Mortgage Rates
