St Louis Mortgage Refinance and Real Estate News -
News: Recovery Worries Due to Fed’s Plan to Stop Buying Mortgages
News from Capitol Hill is that the Federal Reserve’s pledge to stop buying mortgages by the end of March is sparking fears among home builders, mortgage investors and even some Fed officials that mortgage rates could rise and knock the already fragile housing recovery off course.
Interest rates on 30-year fixed-rate mortgage have risen by a quarter of a percentage point in the past month to around 5.2%, according to HSH Associates.
This is near their highest levels since September as the bond market has pushed up long-term interest rates amid signs of an improving economy.
The recent rise in St. Louis mortgage rates could be a prelude to even bigger increases in coming months as the Fed steps away from support for the housing market.
Many financial analysts in the mortgage and real estate markets are cautiously counting on the Fed to change course in hopes they will keep buying past March 2010 which many officials are reluctant to do.
When such a big investor stops buying, “that could lead to material increases in [interest] rates across the board,” said Ronald Temple, portfolio manager at Lazard Asset Management.
He sees mortgage rates rising by a percentage point when the Fed stops buying in March.
On a worse note, a potential withdrawal of government support, combined with high unemployment and rising mortgage foreclosures, could push home prices down as much as 20% Temple alluded to.
The Fed currently holds $909 billion of mortgage-backed securities. In the past year it has purchased 73% of the mortgages that government-backed Fannie Mae, Freddie Mac and Ginnie Mae have turned into securities.
Purchases by the Treasury pushed total government purchases above the $1 trillion mark.
The Fed says it plans to top off its purchases at $1.25 trillion by the end of March, but this unsettling yet not so surprising decision is contingent on whether the economy is strong enough to see this plan through to the end.
So, for those who have been waiting to do a St. Louis refinance may not want to put this decision off any longer.
Consider this a wake up call. In fact, this may be the right time (or last chance before rates go up) to meet with a knowledgeable mortgage broker to discuss your home loan or refinancing options.
The St. Louis Refinancing Group news team would like to recommend such a reliable mortgage broker, Liberty Lending Consultants. Give Steve Swan or Doug Stahlschmidt a call at 314-698-4092.
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Tags: st louis foreclosures, st louis home loan, st louis mortgage, st louis mortgage news, st louis mortgage rates, st louis refinance, st louis refinancing
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