Mortgage News

As of March 31, 2010, the Federal Reserve has stopped the policy of buying mortgage-backed securities. The reason the Fed has implemented this policy in the first place was to help keep mortgage rates low while, in effect, subsidizing the real estate market and providing capital for distressed lenders as well as investors.
What happens now? For now, most real estate experts do not believe that mortgage rates will begin any major upswings in the near future. Freddie Mac CEO Ed Haldeman told in a recent article that he didn’t believe there would be “a major dislocation and a major move up in mortgage rates.” However, if the rates do start to skyrocket, the Fed has not completely closed the door on the possibility of beginning to purchase mortgage-backed securities again.
According to the Mortgage Bankers Association, US mortgage applications were up 1.3% for the week ending March 26, 2010. That shows a 6.8% increase since the week of October 30, 2009. Mortgage Bankers Association’s Michael Fratantoni said in a Reuters Report (March 31, 2010) that he believed the increase in mortgage activity appeared to be tied to the approaching deadline for the government’s homebuyer’s tax credit. To be eligible for the $8000 tax credit for first time homebuyers or the $6500 tax credit for current homeowners, all contracts must be signed by April 30, 2010 and must be closed by June 30, 2010.
These numbers all mean good news for the real estate market as a whole. An increase in mortgage applications indicates that home sales are on the rise as well. To see the exact impact these events are having on the local Houston area market, we will need to wait until next week, when the Houston Association of Realtors releases its March home sales results. Keep an eye out for updates in the Keller Williams blog.
Keller Williams Realty Northeast