Fed Eases a Key Support for Mortgage Rates

Massachusetts Mortgage Rates from Bankrate.comAgainst a background of cautious optimism about the economy, the Fed this week announced it would begin to phase out its purchases of mortgage-related securities issued by Fannie Mae and Freddie Mac, with a goal of ending the program by March 31.

That $1.5 trillion program has been aimed at keeping mortgage rates low, and propping up the housing market.

What does this mean for home buyers? The Fed has been buying about 80 percent of such securities, so even a gradual phase-out could put upward pressure on mortgage rates if private investors stay on the sidelines.

Rates for 30-year home loans have been drifting down for weeks, as the graph shows, and are now close to the record lows of last spring. With Fed support waning, the question is, will we see them again this low next spring?

Graph updated daily by Bankrate.com.   See also New York Times Consumer Rates.   Read full New York Times story.

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About Ron Cohen

Retired, I've spent the past few years describing "the life of a pond in words and photographs:" http://atmywindow.com/. Recently I've created a new photo blog devoted to "people and places along my way:" http://www.roncohen.com.
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