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Great News for Home Buyers – Interest Rates Remain Low

MARKET UPDATE:

Mortgage bond prices rose last week pushing mortgage interest lower. The data was mixed with stronger than expected consumer sentiment and a disappointing 5 year Treasury note auction. Fortunately the Fed meeting resulted in some positive mortgage interest rate movements and strong foreign demand for the 7 year Treasury auction helped rates improve. For the week interest rates fell by about 1/4 of a discount point.

The employment report will take center stage this week. Consumer confidence, ADP employment, income, outlays, ISM Index, and factory orders data have the potential to move the financial markets. The recent economic data has been mixed. Remember that the bond market typically likes to see weaker figures with very little price pressures.

Good News

The housing sector of the economy has been hard hit during these troubled economic times. In an effort to stablize things the Federal Reserve implemented a system to keep mortgage interest rates low through the purchasing of $1.25 trillion of mortgage-backed securities throughout this year. Few can argue the Fed has not been effective with rates at historically favorable levels. However uncertainty still looms regarding the future of mortgage interest rates after the Fed program stops. The Fed provided some good news last week when they indicated the purchasing of mortgage bonds would be extended into the first quarter of 2010. Prior to the meeting all indications were the program would stop at the end of this year. The bad news is  that they have not increased the amount to be spent as of yet. This still leaves much uncertainty and some view it as just a delay. The Fed also indicated that long term inflation expectations were stable. This is great news for fixed income securities and the stability of mortgage interest rates. Remember, the current goal of the Fed is to keep mortgage interest rates relatively low and stable. They appear to be content with rates in the current historically favorable range. So if you’re thinking of buying a home NOW is a great time – don’t miss out on these great  interest rates.

Market Update from Paul Gonzales @ CountryWide, Mortgage Inc.