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Why Most Lenders Say Mortgage Rates Will Go Up

I received an email this morning which again predicted it was just a matter of time before rates go up again.  The factor keeping rates at an unusual low for such an extended period is the Fed massive purchasing program of Mortgage Backed Securities.  This is just about over.  See the trend:

The Fed's Purchase of Mortgage Backed Securities (MBS)

 

As you can see from this chart, the amounts of Mortgage Backed Securities is slowly dwindling.  The program is set to wrap up by March 31st.  About 95% of the allotment has been used of the $1.25 Trillion.  This leaves about $66 billion left.

To grasp the signifigance, these funds purchased about 3 out of every 4 home loans during the past year.  When such a large buyer stops buying, you can understand why there are predictions that the market will change and that that prices will worsen, or interest rates will go up.

(This information from Gulf Cost Mortgage Group, Baton Rouge, 225-753-7985)

 

Comment balloon 2 commentsAnn Dail • February 15 2010 04:41PM

Comments

Ann, it surprises me the indifference that most people have to this information. The FED, by all indications, will be out sometime in March.

But with almost no buyers other than the FED, but as our Governator would say: "I'll be baack!"

Posted by Greg Cook, Mortgage Consultant NMLS ID# 283159 (Platinum Home Mortgage) almost 10 years ago

Greg,  I don't understand all the subtilties of the financial market, but seeing charts like this and knowing how big the part of the FED, even I can understand this. 

Posted by Ann Dail, Broker/Realtor,CRS, ePRO, SRS, B.A.Chem (Baton Rouge Area Homes, Louisiana, USA, 225-761-0551) almost 10 years ago

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