Last Updated:
June 19, 2010
Arizona Real Estate
Here’s what’s really going on…
In May 2009, the Federal Reserve's purchases of MBS peaked at an average of $25 Billion per week. As of November, the average weekly purchases dropped down to $14 Billion. At the end of November, the Fed had already used over 80% of the allocated funds for MBS, meaning less than 20% remained to be used over four months.
Making the problem worse is that the Fed now has less money available to purchase MBS while at the same time, the supply of these securities has increased as a result of refinance and purchase activity that was triggered by lower rates.
In short, while rates are still very good, they may not be for long. What should you do to protect yourself?
First and foremost, work with a knowledgeable mortgage originator who studies and monitors the market.
Second, don’t be fooled by media stories that only report the headlines and don’t understand the underlying implications of the Fed’s actions. If you ever hear something in the news but aren’t sure what it means to your situation, feel free to call or email us. Should we not know the answer, we will find it for you.
Finally, if you haven't yet explored how the current rate environment might benefit you or someone you know, let’s arrange a time to discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.
Excerpts from The Kiplinger Letter
What’s ahead for the U.S. economy? A year ago, it pulled out of a tailspin. But upward propulsion has been modest, with tentative employment growth. Now, with Europe teetering on the edge of a financial abyss, worries about contagion are driving down stock prices and sending investors scurrying to U.S. Treasuries.
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