Mbs | The RI Blog

The Federal Reserves decision to stop purchasing MBS last month seems to not have particularly affected the 30-year fixed rate, according to Scott Grannis:

Message to homebuyers: interest rates on 30-year fixed rate mortgages are extremely attractive from an historical perspective, since they are now about as low as they have ever been. Given the great uncertainty surrounding future monetary policy (i.e., how much will the Fed have to raise short-term rates to keep inflation at bay, given the Fed's massive $1 trillion injection of bank reserves), fixed rates also look very attractive relative to adjustable rate mortgages.

I don’t know if I particularly buy this. First, I see no reason to jump to the conclusion that the FEDs decision to stop MBS purchases had any impact whatsoever on the 30-year rate, at least not this fast.

But, I’m no economist, of course…

Tagged as: editorials, federal reserve, mbs, mortgages, Predictions, rates No Comments

17Mar/100

Meredith Whitney Sees a Double Dip in U.S. Housing Market

Meredith Whitney, the prominent and respected financial analyst said Tuesday that the housing market was "sure to double dip." Speaking on CNBC's Worldwide Exchange program, Whitney explained that this would be caused by the Federal Reserves recent apprehension to purchase mortgage-backed securities.

“The asset classes of MBS and Treasuries are priced for a material correction in my opinion,” she said. “The only buyers of agency MBS are the Fed and banks, so you see how precarious that market is..If the Fed pulls back, that’s a really big deal… because there’s no substitute buyer.”