Interest Rate Update

Wow, the bond market is soaring with the news Tuesday from the Federal Reserve. The Fed announced that it will initiate a program to purchase toxic mortgages from Government Sponsored Enterprises (Fannie Mae, Freddie Mac, and the Federal Home Loan Banks). Purchases of up to $100 Billion in GSE direct obligations under the program will begin next week. Purchases of up to $500 Billion in Mortgage Backed Securities will be conducted with the goal of beginning these purchases before year-end. The ten year treasury just went under 3% today. Last time it was there might have been in the 1950’s. So rates are now in the 5.25 – 5.375% range. The question is ~ for how long? Usually these events have a short life span. So here is something to keep in mind:

a 1% rate drop equates to around a 10% payment drop for a buyer.

If you are on the fence, this could be the push you've been waiting for.