The Fed’s “Mortgage Shopping Spree”
Drowned out in all the health care reform discussion is a quiet — but big — drop in mortgage rates.
As of this morning, rates on 30-year mortgages are being quoted at 5%.
That’s a big improvement over just six weeks ago, when rates were in the mid-5’s — and thought to be heading higher — based on excess liquidity-driven inflation fears.
Now, the mortgage market and long-term rates appear to be driven by two things:
One. Relatively weak demand, due to the soggy economy; and
Two. The Fed’s concerted program to buy up mortgages and keep the market liquid (it has a cool, $1.25 trillion (!!) war chest to do exactly that).
Not necessarily in that order . . .