Breaking News!!!! Rates may move slightly higher!!!! Seattle HomeOwners Alert!
Breaking News!
Mortgage Back Securities and Bond prices received a nice boost yesterday afternoon after the Fed Minutes from the April 29th meeting revealed that some Fed members were open to discussing the allocation of an additional $500B to purchase Mortgage Backed Securities, above their present commitment of $1.25T. Interest rates hit some of the lower levels of the year of 2009.
Currently there is over $700 Billion in Mortgage Bonds that the Federal Reserve has committed to purchase which at the current daily purchasing levels should last until the end of the year. Within the next six months it will be interesting to see the Federal Reserve stance weather to come back in and purchase more or of they will elect it to be on the open market. What does this all mean to interest rates. With speculation and rumors of something positive to the table, Wall Street and Traders hedge and bet the good news improving rates. This hurts when the rumors are verified and will not come to fruition causing the market to sell off, increasing rates. Could this mean that rates are going to remain higher. Most likely not, BUT and this is the BIG but, current and future home owners have to keep in mind that timing is key. As we move through the peak real estate season across the country, locally in Washington home sales are beginning to increase over the numbers of 2008. No matter how you break this down numbers are numbers and they are higher. Not a boom but higher. Banks are not in control of interest rates right now! The Federal Reserve is! With that said consider what may happen if the guarantee for mortgages to be purchased by he Federal Reserve is withdrawn. Clearly by the reaction that is happening right now on Thursday the 20th of 2009, rates may move higher.
With still the job market continuing to struggle Initial Unemployment Claims reported today for the latest week fell 12,000 to 631,000 versus the expectation of 640,000, signs of some positivity, BUT still below where we all want it to be.
With many of the top economists in the United States pointing now at the end of summer being the end of the recession, recovery will not come quickly, jokingly we may not even know recovery is happening. Lesson learned, everyone now has to be conscious of spending and savings. Preparing for the future of inflation to return now is the time to adjust cash flow so when the time comes we have the proper reserves to adjust accordingly. Proof of this already happening is the national statistics of house hold savings increasing across the board.