The Fed’s $600B bond purchase program has come under tremendous political heat over the past month. There was talk of ending the program altogether, which would have been a big punch in the gut for refinance mortgage rates. As the Fed buys back large chunks of US Treasuries, the bond price increases and the yield declines. Since the yield is a major force behind mortgage rate pricing, this is a big deal for the home finance market.
Wednesday’s assessment of the Fed policymakers was that the economy isn't growing fast enough to lower unemployment and still needs help from the Federal Reserve's $600 billion Treasury bond-purchase program. The Fed noted that the economy still faces risks. The biggest: that high unemployment will damp consumer spending, which accounts for 70 percent of national economic activity.
Fed policymakers said Wednesday they'll continue to monitor the bond-buying program. They have left open the option of buying more bonds if the economy weakens, or less if it strengthens. An ending of the program had the potential to send mortgage rates up significantly, further damaging an already fragile housing market.
In the end, mortgage refinance rates are still near historic lows, yet there appears to be the risk of an increase to rates as the stock market breaches the 12,000 mark on the Dow.
On the housing front, new-home sales in 2010 fell to lowest point in 47 years. Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming.
Builders of new homes are struggling to compete in markets saturated foreclosures. High unemployment and uncertainty over home prices have kept many potential buyers from making purchases. High foreclosure rates and lackluster buying continue to bring housing prices south.
For refinancing homeowners that have suffered significant home depreciation and fall into the high loan-to-value scenario camp, there are still great deals available with FHA loans and possibly by utilizing the Fannie Mae DU Refi Plus program.
If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
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