Home Mortgage Rates to Increase
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home mortgage interest rates
Early last year, the Federal Reserve began purchasing mortgage-backed securities, which helped maintain low interest rates for consumers. However, the Fed’s purchase program ended in March, and some analysts forecast interest rates to increase throughout the rest of the year. One financial publishing company predicts that rates likely will rise to 5.5 percent by mid-2010 and close the year at 5.75 percent to 6 percent. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) projects rates on 30-year fixed-rate mortgages to average 5.6 percent this year.
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Fed Leaves Key Interest Rate Unchanged
brokerforyou.com Bob Schwartz
The Federal Reserve announced it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time. “Information … suggests that economic activity continues to strengthen and that deterioration in the labor market is abating,” the Fed said in a prepared statement. Read more 
Are Home Mortgage Rates About to Rise?
Home mortgage rate cut
Last week about the Federal Reserve continuing its policy of keeping interest rates low to stimulate the economy. Also, thirty-year fixed mortgage rates slipped below the five percent mark for the first time in nearly half a year, dipping to 4.9 percent and fifteen year fixed rates are just 4.4 percent. It looks like the low rates caused applications for new mortgages to jump by nearly 6 percent last week, according to the Mortgage Bankers Association.
According to the statement released by the Fed, in an effort to “provide support to mortgage lending and housing markets” they will “purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt.” Additionally, “they expect to gradually slow the pace of these purchases in order to promote a smooth transition.” Read more
Economy – Fed Head Sees Significant Long-Term Threat
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Today, Federal Reserve Chairman Ben Bernanke said, in part, that rising deficits posed a significant long-term threat. Bernanke said: “Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance. Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth.”
If the United States is unable to control its long-term deficits, it could weaken the dollar and drive up inflation, hurting the value of those dollar-denominated assets. Bernanke also said: “We now are on a process of slow and gradual repair, both in the financial system and the economy. We averted, I think, a very, very serious calamity. As a consequence, inflation is likely to move down some over the next year relative to its pace in 2008. That said, improving economic conditions and stable inflation expectations should limit further declines in inflation.”
San Diego CA real estate
Fed Spends $750 billion to Lower Mortgage Rates
The Federal Open Market Committee (FOMC) informed the public this week that it will expand its dominating position in the mortgage-backed security (MBS) market, throwing an additional $750 billion there. Markets rallied on the news with Treasuries shedding up to 51 basis points.
Economists were up in arms about the Fed's measures. Stephen Stanley of RBS Greenwich Capital said via the WSJ blogs:
Bloomberg summed it up in the lead of their coverage:
By committing to buy Treasuries and double his purchases of mortgage debt, Federal Reserve Chairman Ben S. Bernanke signaled his determination to avoid a repeat of the Great Depression and his willingness to pump as much cash into the economy as needed to end the current crisis. San Diego real estate
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Fed cuts interest rates to almost zero
The Federal Reserve cut its target for the federal funds rate, which is what banks charge each other for overnight loans. This key short-term interest rate is now at a record low range of zero to 0.25%, from the previous 1%.
Ian Shepherdson, chief U.S. economist for High Frequency Economics said: "So here we are: Rock bottom. The Fed move is a reflection of an utterly desolate economic picture, which will persist for the foreseeable future as the wrenching adjustment in household finances continues."
The ultimate cost of the Fed rate cuts and bailout programs may be huge inflation a few years down the road. San Diego MLS