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Mortgage Rate Predictions – The Fed Purchases $75 Billion in Mortgage Backed Securities

Posted on | April 27, 2009 | 61 Comments

UPDATE:  For more recent mortgage rate predictions make sure to go to the mortgage rate predictions category.  Also please check out the mortgage rates forecast category for more interest rate analysis.

August 17th – The current mortgage rate predictions article can be found here:  Mortgage Rate Predictions – Mortgage Rates Around 5.2% in Mid August.  Mortgage rates remain historically low and it looks like it is going to stay that way for some time as the Government continues to work very hard to keep interest rates low.  The article goes into great depth about where we have been and where we are likely to go as far as mortgage rates are concerned.

The July 19th mortgage rate predictions article can be found here: Mortgage Rate Predictions – Interest Rates Up Big This Week. There is very bad news on the horizon as the 10 year treasury rate yield continues its strong uptrend. It looks like the long term mortgage rates trend is bottoming and we are likely to see much higher mortgage rates. How much higher? Check out the article to find out!

The July 6th mortgage rate predictions article is available here: Mortgage Rate Predictions – Rates Ready to Make a Strong Move. Average mortgage rates are likely to make a strong move in one direction but do you know which direction that is going to be? Stay tuned to Subprime Blogger to find out!

June 29th – The most up-to-date mortgage rate predictions article has been published here: Mortgage Rate Predictions – Rates Find Support This Week? Also remember that on Subprime Blogger we are going to release daily mortgage rates and how they correlate to the to 10 year treasury rate; please check back in every morning to get a prediction of where rates are headed based on the daily trading moves of the 10 year treasury rate.

June 23rd – I recently updated my newest article on mortgage rate predictions, please check it out and share with friends: Mortgage Rate Predictions – Rates Remain Stable

June 15th -  Mortgage Rate Predictions – Mortgage Rates Stabilize in Late June?

June 12th – My prediction for this week was

30 Year Fixed Rate Mortgage – 5.49%
ACTUAL 30 Year Fixed Rate Mortgage – 5.59%

Yesterday evening I wrote that mortgage rates are going MUCH higher.  The 10 year treasury rate almost hit 4% this week but has seen some heavy selling since then.  This is exactly what I expected but we still need to see where the treasury yield finds support.  This will determine where mortgage rates are going to go from here.  Selling of the yields suggests we will at least see some stabilization but lets see what tomorrow and early next week brings.

June 6th – The 10 Year Treasury Yield continues to rise towards 4%.  By looking at this chart you can see that the 10 year yield has been in a steady uptrend since the end of December of last year.  Many analysts believe that the increase in the yield is a sign of confidence that the economy is getting better.  One thing remains true throughout recent history, as the yield rises so do interest rates.  I am not sure that I am as confident as others that the economy is getting better but I cannot fight the fact that investors somewhere feel that way.  With that being the case, I strongly think rates will rise again next week.

Mortgage Rate Prediction for June 11:

30 Year Fixed Rate Mortgage – 5.49%

The mortgage rate survey from Freddie Mac came in this week, June 3rd, at 5.29% which is up HUGE from last week’s rates of 4.91%.  The housing market is going to greatly struggle if rates continue higher like this.

Mortgage Rate Prediction for June 4:

30 Year Fixed Rate Mortgage – 4.98%
ACTUAL 30 Year Fixed Rate Mortgage – 5.29% (WOW!)

I personally think the uptrending 10 year treasury yield will bring mortgages rates oh so close to 5%.

Last week the Freddie Mac weekly mortgage rates survey reported an overall average of 4.80% vs. my predicted 4.77%.  The 30 year fixed rate dropped slightly in part because the Federal Reserve purchased $50 billion in mortgage backed securities during the prior week.  The objective of the Fed it to put a ceiling on mortgage rates and that ceiling is getting lower and lower each week.  Last week the Federal Reserve reported that they increased their purchase of MBS’s by 50%; this is sure to send mortgage rates even lower.

Current mortgage rates are artificially low because of the actions by the Federal Reserve Bank.  Unfortunately, the government is not letting free markets work themselves out but this is not different than any other part of the business world today.  Now that the Fed is accelerating the amount of money they are dumping into MBS’s it is hard to predict a rise in mortgage rates in the near future.  This week’s mortgage rate predictions:

30 Year Fixed Rate Mortgage – 4.76%

The data produced by Freddie Mac on Thursday should be quite interesting this week as we are likely to hit another “all time low” in terms of survey data.  It is still unknown if this drop in mortgage rates will help the overall housing market, but the government is sure giving it a try.

Category: First-Time Buyer Questions, Mortgage Rate Predictions
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Comments

61 Responses to “Mortgage Rate Predictions – The Fed Purchases $75 Billion in Mortgage Backed Securities”

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