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Mortgage Market Update 02/05 - Where is the Fed?
Posted 02-05-2009 at 11:48 AM by dlenski
Where is the Fed?
2/5/2009 You will see in the article below I have been talking about the Fed buying Mortgage Backed Securities. They will release today the amount of MBS they purchased last week. Based on interest rates moving up, I would say not many.
The government never passes on spending our money. That means there is $450 Billion to be spent in 5 months. That is $90 billion per month or twice as much as they spent in January. Rates should remain low and push a little lower from current levels, not 4.5%. Lock on the dips.
1/30/09 The Fed has bought the following mortgage notes in January. They bought 23 billion the 8th-14th, 19 billion 15-21st and 16.836 billion the 22nd-28th. The following is just Fannie Mae notes. The first purchase was 3.35 billion in 4% notes and $0 in 5.5% notes. The second purchase was 700 million in 4% notes and 5.8 billion in 5.5% notes and a split of 3.6 billion on the 4.5% and 5.0% notes. This last purchase was $0 in 4% notes, 200 million 4.5% notes, 1.134 billion 5.0% notes and 4.705 billion on 5.5% notes. That is the research.
Here is the conclusion. The Fed started buying securities at 4% to drive interest rates down and they were successful. Then they said they would keep interest rates low on January 13th. They have decreased the amount of MBS they are purchasing since. They have changed the denominations they were purchasing from 4.0% to 5.5% notes. With that change in purchase patterns has come higher rates.
It does not appear the Fed is driving towards the mythical 4.5%. It appears they may have turned this bus around. Take advantage of the dips when available.
Home Mortgage Loans and Refinance in Milwaukee and across Wisconsin - Wholesale Mortgage Services of WI
2/5/2009 You will see in the article below I have been talking about the Fed buying Mortgage Backed Securities. They will release today the amount of MBS they purchased last week. Based on interest rates moving up, I would say not many.
The government never passes on spending our money. That means there is $450 Billion to be spent in 5 months. That is $90 billion per month or twice as much as they spent in January. Rates should remain low and push a little lower from current levels, not 4.5%. Lock on the dips.
1/30/09 The Fed has bought the following mortgage notes in January. They bought 23 billion the 8th-14th, 19 billion 15-21st and 16.836 billion the 22nd-28th. The following is just Fannie Mae notes. The first purchase was 3.35 billion in 4% notes and $0 in 5.5% notes. The second purchase was 700 million in 4% notes and 5.8 billion in 5.5% notes and a split of 3.6 billion on the 4.5% and 5.0% notes. This last purchase was $0 in 4% notes, 200 million 4.5% notes, 1.134 billion 5.0% notes and 4.705 billion on 5.5% notes. That is the research.
Here is the conclusion. The Fed started buying securities at 4% to drive interest rates down and they were successful. Then they said they would keep interest rates low on January 13th. They have decreased the amount of MBS they are purchasing since. They have changed the denominations they were purchasing from 4.0% to 5.5% notes. With that change in purchase patterns has come higher rates.
It does not appear the Fed is driving towards the mythical 4.5%. It appears they may have turned this bus around. Take advantage of the dips when available.
Home Mortgage Loans and Refinance in Milwaukee and across Wisconsin - Wholesale Mortgage Services of WI
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