Where are Mortgage Rates Headed?

Through January 21 of this year, The Federal Reserve has purchased $52.6 Billon in Mortgage Backed Securities (MBS) from Fannie/Freddie Mac. This represents approximately 10% of the $500 Billion dollar commitment by the Fed to buy MBS and lower interest rates.

This action by the Federal Reserve, was in direct response to surplus inventory of MBS in the market after the sharp increase in mortgage default rates. This package, in conjunction with tightened lending practices should help stabilize our overall mortgage and housing industry.

Mortgage Rates remain attractive but volatile as liquidity, economic stimulus recovery, and inflation all dance.

What to Watch
Economic recovery could force government liquidity programs to subside. Reduction in market liquidity could drive rates back up to hedge against inflation.

Rates are attractive now, but as we draw close to June, oil prices are likely to rise in anticipation of increased consumption. The economic stimulus packages will hopefully have spurred consumer spending and the $500B commitment to purchase MBS will be complete.

Best Projection
These factors will put terms like inflation back into our headlines and it will be a matter of time before rates hike again. If you have a plan or thought of finding a an aggressively low rate mortgage loan, inside the next 90 days would be your safest bet.