It's no surprise that the FOMC is leaving the Fed Funds Rate unchanged…the big question is whether or not they are going to extend keeping mortgage rates artificially low beyond March, when the program is said to terminate. And moments ago, the FOMC Statement confirms that the plans are still sticking to the end of March:
"To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter."
Many experts feel that the Fed's participation in buying mortgage backed securities, which mortgage rates are based on, has kept rates about one full point lower than what they would be with out their helping hand in the markets.
Following the release of this news, mortgage backed securities are deteriorating and I'm anticipating new rate sheets from the lenders we work with featuring pricing for the worse.
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