Federal Reserve Makes An Announcement: Mortgage Rates fall below 5%
The Fed just announced that they will buy another$300 billion in long-term government bonds and $750 billion in mortgage backed securities guaranteed by Fannie Mae and Freddie Mac.
Will this cause a big drop in mortgage rates? Not necessarily, although analysts expect rates will decrease 0.25 to 0.5 percentage points. The Fed’s actions create a demand for mortgage backed securities which should most likely keep home loan rates from increasing for the foreseeable future. This is good news for home buyers who realize that now is the time to buy and want to take advantage of the bargain prices that are out there. However, based on what the Fed has been buying when they started their purchasing program at the beginning of this year, their actions may keep a lid on rates, but may not push them much lower.
By the close of business on March 19, the 30-year conforming FRM fell to 4.94%, according to HSH Associates. With rates this low and so many bargains out there, what is keeping you from buying? Don’t wait until prices start to rise. Take advantage of today’s low interest rates.
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