This weekend, the Federal Reserve did two things which are starting to call into question whether the current policy is wise when considering the larger picture.
Not only did the Fed cut the discount rate by .25%, not in and of itself a bad move, but they also were behind the bail out of financial giant Bear Sterns, funding the deal to help Bear Sterns avoid bankruptcy.
Inflation data was released this morning and came in suprising flat, opening the door for another Fed rate cut next week.
Fixed mortgage rates are improving on the data. Remember, inflation is the enemy of long-term rates because inflation erodes the value of a long term investment. The inverse is true also. Tame inflation makes long term returns more attrative, hence improving long term fixed mortgage rates.
You may have seen the headlines yesterday about the Federal Reserve's move to inject as much as $200 billion into the struggling credit markets. The plan would pledge the money in the form of treasury securities in exchange for mortgage-backed securities.
The move would help struggling Fannie Mae and Freddie Mac the most. Fannie and Freddie have had liquidity problems recently because of their inability to sell mortgage backed securities on the secondary market. ...
Increase to both conforming loans and FHA mortgages have been announced as part of the government's economic stimulus package.
The increases affect only high-cost parts of the country, but will allow more homeowners to qualify for conforming loans and FHA loans.
Will this help you?
The new increases will help some home owners who previously only qualified under "jumbo" mortgage loan programs. Jumbo mortgages are currently carrying .75-1% higher interest rates than ...
