how will this affect mortgage rates??
If it gets much below 6% on the street I’ll refinance..........
I just locked in 4.85. Down from 5.50
It won’t affect mortgage rates. The Fed buying their own debt is reducing mortgage rates. Cutting the funds rate and trying to hurt the dollar is considered “inflationary” and causes the spreads to go up so it raises mortgage rates. The bottom line though, is that mortgage rates look to be historically low for a long time, until the bond market collapses and crushing inflation occurs (assuming it works to reflate.)
Since the vast majority of the mortgage market now depends on Freddie/Fannie, the price/yield on agency bonds is what matters now for fixed mortgages, and LIBOR is one of the big benchmarks for ARM’s.
The Fed has done a couple of buys of agency paper to deliberately depress the yield on agencies in the last couple of weeks, with the idea of trying to force rates on fixed mortgages down to 5.0% or less. The mortgage rate, especially on fixed conforming loans, is not the problem just now. It is the buyer qualifications that banks are putting on borrowers that is putting a lid on the housing market.
After losing hundreds of billions to trillions of dollars, bankers are suddenly developing a criterion of expecting the borrower to be able to repay the loan before they write the loan. Wow, who woulda thunk it?