25 March 2010
Here's today's market update. Yesterday in tandem with the Fed, the Treasury announced the cutback in purchasing mortgage backed securities. This immediately caused Mortgage Interest rates to spike up. To the tune of about one half a percent in costs. What that means is: for every $100,000 borrowed it will cost the consumer $500 more in one time costs (points we say in this business) to do the loan.
Their actions were justified by stating that the economy is showing signs of recovery and "we want to get back to normalization regarding this area of capitol infusion." "It is time the market gets the message that they will not be here to continuously prop up the mortgage markets."
The Fed however reiterated their position of not raising the Fed rate until there are clearer signs that the economy is in a full recovery and they see no interest rate increases in the foreseeable future.
Well it looks like the baby is being weened off the bottle. As long as they do not starve the baby that's a good thing. I think its funny that basically the Fed and international bankers created this current financial problem by easing lending standards to the point that anyone could borrow money to buy a house and now we, the tax payers are paying for it.
Geoffrey Gault, Mortgage Market Watch
www.geoffreygaultrealestate.com
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