The FOMC (Federal Open Market Committee) and Chairman Ben Bernanke left the Fed Funds rate unchanged today - no surprise here.
However, they made a very important announcement: the Feds will stop buying U.S. Treasury securities by about the end of this October. What does that mean???
A huge reason mortgage rates have stayed so low has been because the U.S. gov't has been buying up Treasury securities for over a year now. The effect of the gov't buying these securities has been to keep the yields on the securities (ie: interest rates) lower. When the gov't stops buying, the yields will rise, which in turn means mortgage rates will begin to move upward (barring some huge disaster like 9/11).
Buyers be aware to get moving if you are waiting for a better rate because your going to miss what's infront of you!(And sellers who are looking to buy after their sale, but are holding out rather then lowering their asking price) that time is quickly running out on their opportunity to grab rates near 5% on a 30-year fixed rate.
Also remind your 1st time homebuyers that they must close on their purchase prior to December 1, 2009 to qualify for the $8,000 tax credit.
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