Federal Reserve Mortgage Backed Securities Purchase Program is Coming to an End
Homebuyers & Refinancers only have brief window to grab the sub-5-percent rates we’re seeing now. Michael Cauley, a broker with Mortgage Resource Plus Inc. in Birmingham, notes that even though the Fed’s $1.25 trillion Mortgage-Backed Securities buying spree isn’t ending until April, it may slow down.
Cauley points out that the Fed program is down to its last $301 billion, which has to last another 25 weeks. That averages out to $12 billion a week to buy mortgage-backed securities, far off the pace of the $20 billion purchased just last week.
“This is obviously a significantly lower amount of buying, which will lead to higher mortgage rates,” Cauley says. “There’s no disputing the math. Consumers should not anticipate interest rates going lower than the current market.”
That means people who have their tax returns, wage stubs and other paperwork ready to go for a refinance or home purchase should get started!
“I remind everyone when rates are below 5 percent that it’s the lowest rate in 50 years,” says Dale Vermillion, author of “Navigating the Mortgage Maze.” “Any time you get the chance, you should take advantage of it.”
Paul Wickstrom