Purchase by Fed should help Borrowers
The residential real estate market and the mortgage industry received some good news this week. The Fed announced that it will purchase $600 Billion worth of mortgage-backed securities (mortgage bonds) backed by Fannie Mae, Freddie Mac, and Ginnie Mae.
This should help increase the availability of credit, while also lowering fixed mortgage rates, as interest rates on conventional, FHA and VA loans are tied to these bonds. In addition, the Fed will allocate $200 Billion to create liquidity in the auto, student, and small business loan markets.
The 30 year conforming, FHA and VA rates fell to the 5.5% range yesterday. So the mortgage interest rates available to borrowers are the lowest rates in about 5 years!
Low home prices, lots of inventory and low interest rates. It’s a great time to buy a home!
– N. Mark Kramoltz © 2015