{"id":2796,"date":"2008-03-18T12:05:14","date_gmt":"2008-03-18T19:05:14","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=2796"},"modified":"2008-03-18T12:05:14","modified_gmt":"2008-03-18T19:05:14","slug":"will-the-fed-buy-mortgage-backed-securities-in-the-open-market","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2796\/will-the-fed-buy-mortgage-backed-securities-in-the-open-market\/","title":{"rendered":"Will the Fed Buy Mortgage Backed Securities In the Open Market?"},"content":{"rendered":"

I never post my Mortgage Rates Reports<\/a> here.\u00a0 They’re boring unless you are thinking about buying a home or refinancing your mortgage.\u00a0 Today, it seems plausible that the Fed is shifting its open market activities from buying treasuries, to buying mortgage-backed securities, in order to bolster liquidity in the mortgage industry.<\/p>\n

Here’s what I said<\/a>:<\/p>\n

We call this phenomenon stagflation and it’s REALLY\u00a0 bad for the economy.\u00a0 The Fed has been aggressively cutting interest rates and the declining housing market is closing down mortgage companies, investment banking firms, and real estate brokerages.\u00a0 What more can the Fed do to help?<\/em><\/p>\n

The Fed can (and will) buy mortgage-backed securities.<\/strong>\u00a0 <\/em><\/p>\n

Rather than to buy treasury notes in the open market, the Fed will be buying mortgage-backed securities.\u00a0 They will want to get those assets off investment banking firms’ balance sheets and provide stability to the MBS market.\u00a0 Remember when I said that only the uneducated pay attention to the treasury note to determine the direction of mortgage rates<\/a>?\u00a0 Today is proof. <\/em><\/p>\n

The spread between treasury notes and mortgage-backed securities has been widening these past six weeks. Why?\u00a0 America was considered to be a sub-prime nation;\u00a0 everybody was expected to default on their home loans.\u00a0 Expect the Fed to prop up the MBS market in the next 4-6 weeks.\u00a0 That will be bad for treasury notes and good for MBS.<\/em><\/p>\n

Remember when I compared this to the junk bond crisis of the early 90’s and advised you not to panic<\/a>?\u00a0 \u00a0Now is the time to take action.\u00a0 There will be some great opportunities to lock into a low mortgage rates during the rest of this month.\u00a0 If you’re closing a loan in less than 14 days, lock your rate.\u00a0 Otherwise, float and see mortgage rates decline a bit.<\/em><\/p><\/blockquote>\n

Thoughts?\u00a0 I don’t care if it’s good or bad policy, I care if its a realistic move on the Fed’s part.\u00a0 I think they’re doing it now and will increase that activity in the near-term.\u00a0 If I’m right, we’ll see lower mortgage rates and the Treasury\/MBS spread will narrow.<\/p>\n","protected":false},"excerpt":{"rendered":"

I never post my Mortgage Rates Reports here.\u00a0 They’re boring unless you are thinking about buying a home or refinancing your mortgage.\u00a0 Today, it seems plausible that the Fed is shifting its open market activities from buying treasuries, to buying mortgage-backed securities, in order to bolster liquidity in the mortgage industry. Here’s what I said: […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[],"class_list":{"0":"post-2796","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":761,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/761\/why-the-fed-matters-to-real-estate\/","url_meta":{"origin":2796,"position":0},"title":"Why The Fed Matters to Real Estate","author":"Dan Green","date":"December 12, 2006","format":false,"excerpt":"The Federal Open Market Committee meets today and will keep the Fed Funds Rate unchanged at 5.250%. It is not what the Fed does, however, that should concern Americans. It's what the Fed says. First, a clarification. The Fed Funds Rate is directly tied to Prime rate which impacts lines\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8627,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/8627\/lower-june-2009-mortgage-rates-rely-on-central-bank-action\/","url_meta":{"origin":2796,"position":1},"title":"Lower June, 2009 Mortgage Rates Rely On Central Bank Action","author":"Brian Brady","date":"May 28, 2009","format":false,"excerpt":"May Day in the mortgage rates market is over.\u00a0 The market got spooked by triangulated opinions about the viability of the US Treasury as a going concern.\u00a0 In response, mortgage traders sold off mortgage-backed securities, some 3-4%, in 4 days, to drive mortgage rates from 4.75%\u00a0 to the 5.375% current\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6014,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/6014\/why-wont-mortgage-rates-drop-below-5\/","url_meta":{"origin":2796,"position":2},"title":"Why Won’t Mortgage Rates Drop Below 5% ?","author":"Brian Brady","date":"December 10, 2008","format":false,"excerpt":"Mortgage-backed securities have been on a tear, improving more than a half a point in the last week.\u00a0 This means that the 5.25% rate, offered at 1 point last Friday, should be offered at a half a point today....BUT.... ...that isn't the case at all.\u00a0 Mortgage rates may very well\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10488,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10488\/1-full-percentage-point-that-would-leave-a-mark\/","url_meta":{"origin":2796,"position":3},"title":"1 Full Percentage Point? 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