Federal Reserve Update: Market Activity

Today the Federal Reserve Board announced they will not be raising the federal funds rate.  The rate will remain at zero to .25 percent.  More importantly to the mortgage rate market they announced that they will extend the purchase of mortgage backed securities (MBS) until the end of the year through March 2010.

The implementation of MBS purchases by the Feds on November 26, 2008 has helped mortgage rates remain historically low for nearly a year.  The low rates have been a healthy companion to the first time homebuyer tax credit in 2009.  These two government sponsored tools explain the increase in housing activity this year.

The good news for now: there is still time to make an offer and qualify for the first time homebuyer tax credit and rates will likely remain low as long as the government is throwing $10-$20 billion, yes billion, a week to the MBS market.

As always, if you have questions about current rates or a scenario, give me a call or shoot me an email.