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Mortgage Market Update

This is a bit of information that I received today from one of the people in my inner circle.  This is some good information to know about banks and mortgage lenders.  I know that this is a huge deal to a lot of Family First Entrepreneurs so I figured that I would share this with you all.

The Federal Reserve announced today a new program to purchase over $600 billion in MBS (Mortgage Backed Securities).

Starting next week the Fed will purchase up to $100 billion in Fannie and Freddie debt and has made commitments to purchase up to $500 billion in MBS backed by Fannie and Freddie starting before the end of the year.

More importantly, this is going to be the start of a fundamental shift in mortgage backed pricing.  This is the liquidity everyone has been looking for.  It’s too early to tell right now but over the next few weeks we should see a large trend reversal with mortgage rates drifting lower.

In Plain English:  There are buyers of mortgage backed securities again, led by the governments massive purchases that were announced today.  Others should follow suit now because of restored confidence in those markets, and further supply and demand forces will drive MBS prices up and yields back down to where they should be.

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