Fed Continues Stimulus – What Will Happen to Mortgage Rates?

After its two meeting, the Federal Reserve announced yesterday that it will continue its stimulus program for the next few months, a move that surprised the financial markets and could have a real effect on long-term mortgage interest rates. The Fed has been buying up $85 billion worth of Treasury bonds and mortgage-backed securities (MBS) each month in an effort to bolster economic growth and keep rates low. These purchases have been credited with pushing mortgage interest rates to rock-bottom Read more [...]

When Is the Best Time to Get a Mortgage Loan?

With interest rates bouncing up and down from week to week, it can be hard to know when is the right moment to jump into a mortgage loan. For example, rates on long-term home loans hit a two-year high of 4.51 percent last week, during the week ended July 11, according to Freddie Mac, up from 4.29 percent the week before. This week, the average rate sank back down to 4.37 percent. What's going on with rates and how can you be sure the time is right to buy? The spikes and falls of rates lately have Read more [...]

Mortgage Prepayment Hits Seven-Year High

Ultra-low interest rates have pushed the rate of mortgage prepayments up to its highest level since 2005, according to home loan data company Lender Processing Services. Mortgage prepayments are defined as anytime a loan is closed on a lender's books before the end of the original term. This includes when a loan is simply paid off early by the homeowner, but also when a loan is refinanced, or the property is sold, or the borrower defaults. With interest rates falling deep into record-low territory, Read more [...]

Fed Proposes Help for Housing Market

The Federal Reserve has actively tried to stimulate the housing market since the beginning of the recession, dropping interest rates to record lows and buying mortgage-backed bonds to free up market lending capital. Unfortunately, it seems that the Fed has essentially run out of options to help pull the mortgage market out of the doldrums and has now turned to Congress. Typically during a recession, the Fed has been able to stir up activity in the housing market by lowering interest rates, which Read more [...]

Fed Stays the Course on Mortgage Bond Buying, Interest Rates Fall

After a two-day meeting, the Federal Reserve's Federal Open Market Committee decided to maintain "its existing policies of reinvesting" in mortgage-backed securities (MBS) in order to bolster the faltering housing market and broader economy. "The housing sector is a very important sector," Bernanke said at a press conference in Washington after the meeting, as quoted in BusinessWeek. The Fed hopes to bring long-term interest rates even lower by buying up MBS, which will (hopefully) allow more Read more [...]

Philadelphia Federal Reserve President Wants Rates to Rise

It's time for the Federal Reserve to start tightening up its monetary policies and that means raising interest rates, said Philadelphia Federal Reserve Bank President Charles Plosser today. "Monetary policy will have to reverse course in the not-too-distant future and begin to remove the massive amount of accommodation it has supplied to the economy," he said during a speech in New York, as quoted on the Wall Street Journal blog. "The economy has gained significant strength and momentum since last Read more [...]

Mortgage Lending Standards Remain Tight

Although U.S. banks appear to be easing up a bit on business loan lending, most lenders have not loosened their mortgage standards in the past quarter, according to the Federal Reserve's senior loan officer survey. The survey, which was released Monday and polled 70 banks, found that for two consecutive quarters now, banks have let up on their business loan standards, with 11 percent of respondents saying they had loosened requirements this quarter. Only 4 percent said they had tightened standards. Still Read more [...]

Foreclosure Mill Banks Get Sharp Reprimand from Feds

After halting proceedings for 10 days on its foreclosures nationwide, Bank of America is now starting up the process again, and its catching a lot of flack, along with the other big bank 'foreclosure mills,' particularly from the Federal Deposit Insurance Corp (FDIC) and the Federal Reserve. "We are looking intensively at the firms' policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures," Federal Read more [...]

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on October 25th 2010 in Mortgage News

Not All Fed Members Say Low Rates Should Last

Even though the Federal Open Market Committee voted this week to keep its target federal funds rate in the range of zero to 0.25 percent for the next six weeks, not all members were on board with the decision. In its statement, the Committee made it clear that it anticipates that "economic condition...are likely to warrant exceptionally low levels of the federal funds rate for an extended period." As evidence for the need for continued low rates, the Committee said that "the pace of recovery Read more [...]

The Fed’s Mortgage Dilemma

A recent article in the New York Times has pointed out the Federal Reserve's latest dilemma: how to maintain its credibility and still continue to stimulate the economy. During the housing crisis, the Federal Reserve bought up tons of toxic mortgage backed-securities. As the Times piece says, the Fed "provided most of the money for new mortgages in the United States last year, effectively lending more than $1 trillion to American homeowners." And later it says that in the fall of 2008 "investors Read more [...]