Fed Announces They are Staying Involved in Bond Purchases

Filed under: Market Comentary

It’s Fed day, which always gives us a chance to talk about how the mortgage industry is affected by these announcements. To reiterate: they always make an announcement about the Fed funds rate, but this rate is a completely different rate than mortgage rates. Even though mortgage rates aren’t directly tied to the Fed rates, these announcements can influence the economy – which has a downstream effect on mortgages.

Today’s Fed Announcements

This time, they talked about both rates. They said that they expect to keep the Fed funds rate low through 2023. The bigger news is that the Fed is buying mortgage-backed securities, which creates demand in the mortgage industry and can keep mortgage rates artificially low.

They reiterated that they fully intend to stay engaged with those purchases. These financial decisions on the Fed level are good for the economy and keeps things moving. They are being aggressive with this approach by buying approximately $40 billion per week in bonds.

Additionally, they made it sound like they will continue buying more bonds if they need to.

What it Means for the Mortgage Industry

What do these announcements mean for our industry? Most likely, these low interest rates are going to stick around for a while. Not only will competitive rates be available for mortgages, but it will also support the housing market.

In the long-term perspective of what it does to the market is honestly a little scary, which is another conversation. But, in the near-term, we can expect the Fed to be all-in to help mortgage rates say low.

If you haven’t already taken advantage of the low rates this year, it looks like there will be a continued opportunity. Reach out if you have questions about your situation:

  • Does it make sense to refinance my home?
  • What does it look like to purchase?
  • Can I still afford to buy with the high housing prices?
  • Does it make sense to buy right now?

Let’s talk about this stuff, because it doesn’t make sense to jump out of the market if you don’t like where housing prices are right now. It’s really important to look at the financing side of it as well. With the rates this low, it makes a big difference on the overall cost of buying a home.

Call, text, or message me any time if you want to discuss your personal situation.

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