Mortgage Rate Update: Another All-Time Low!
Category : Laguna Beach Real Estate
Mortgage Rate Update
Yesterday 30 year mortgages had one of its best days in over a year. The Fed at one of their pre-scheduled FOMC meetings did what markets were expecting, plus more. The view prior to the FOMC policy statement at 2:22 yesterday was that the Fed would institute “Operation Twist” as it has been dubbed, selling shorter dated notes and replacing them with longer term notes and bonds to drive down long-term rates. The amount of shifting was expected to be about $300B, the Fed said it will be $400B. The Fed however surprised markets with the announcement it would turn back to buying Mortgage-Backed Securities (MBS’s) with principle pay downs on MBSs it now holds and instead of investing back into treasuries as it had been doing, investing in more MBSs. The reaction was swift in the mortgage market as MBSs soared in price and interest rates dropped.
The possibility of default by Greece and concern of an international recession have also helped to drive down rates this week in the MBS markets.