A Look Ahead At Interest Rates
There is no question that rates will go up when the Fed stops buying mortgage-backed securities which is supposed to happen at the end of the 1st quarter of 2010. The problem with this is that higher rates could hurt a housing market that is trying to stabilize.
My personal opinion is that the Fed will extend their purchasing and I am very confident they will. I have been wrong before and this opinion was not generated by the article in this posting.
“iMarketNews.com writer Steven Beckner saying the U.S. Federal Reserve may re-enter the market for mortgage-backed securities after its planned exit at the end of the first quarter. The Fed has had a program in place to support the $5 trillion market with purchase of $1.25 trillion worth of the securitized loans, which as kept mortgage rates low. Beckner writes the Fed is prepared to “contemplate changes … depending on conditions in the economy,” Reuters quotes. Beckner quotes “people in the know” (love it) as saying MBS purchase is one option on the table.”