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Fed to Keep Short-Term Rates Low

The Federal Reserve announced Wednesday that it expects to keep short-term interest rates “exceptionally low” for the next few months. It also underscored its commitment to make $1.25 trillion in total purchases of mortgage-backed securities by the end of year.

Both actions are likely to keep mortgage rates low through the end of 2009.

The Fed failed to raise a cap of $300 billion in purchases of Treasury securities, which could lead indirectly to higher mortgage rates because mortgage rates tend to rise in conjunction with Treasurys.

In response to the possibility of rising mortgage rates, the Mortgage Bankers Association this week cut its forecast for total 2009 mortgage originations by 27 percent.

Source: Inman News (06/25/2009)

Ron Mastrodonato / movemyrealty.com does not claim credit for writing this article