“IT AIN’T OVER TIL IT’S OVER.” Yogi Berra.
And whether you find those words deeply wise or simply puzzling…The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over – and this translates to home loan rates rising in the near future. As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.
This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane. And those who can take advantage of currently low home loan rates do not wait, as the clock on these historically low rates is ticking.
Todays Mortgage Rates:
30 Yr Fixed – 4.75% (1 point) / 5% (0 points)
15 Yr Fixed – 4.25% (1 point) / 4.375% (0 points)
5 yr ARM – 3.625% (1 point) / 3.875% (0 points)
7 yr ARM – 3.875% (1 point) / 4.25% (0 points)
FHA 30 Yr Fixed – 4.75% (1 point) / 4.875% (0 points)
FHA 5Yr ARM – 3.875% (1 point) / 4.125% (0 points)
Investment – 5.3755% (0 point) / 5.5% (0 points) 25% down payment required
*Rates are based on 80% loan to value unless noted and 720+ credit score (with the exception of FHA) *Income and Asset verification required and must meet DTI guidelines *This is not a commitment to lend and other conditions may apply