The Federal Reserve met Wednesday and basically said that their support of the bond purchasing program is nearing the end.  The program, in which the government (you and I) were to purchase $1.25 trillion of MBS's or mortgage-backed securities is ending soon, probably by the end of 2009. 

Mortgage Backed Securities of the United States were once regarded as one of the most attractive securities in the world, but when our markets imploded they lost so much value because of the who sub - prime fiasco.  Now the largest purchaser isn't China or France as they used to be, but our own government.  Just amazing.....now our government's purchase of the MBS's is coming to an end. 

What's that mean to your clients?????  Here's the gig.....when the MBS's aren't purchased rates go higher.  That's the bottom line. 

This next part I got from Josephine Nicholas, from the CMPS institute.....

"Since the Fed began purchasing mortgage bonds and intervening in the mortgage markets, interest rates on fixed rate mortgages have dropped a full percentage point below where they would be otherwise.  "Take out the Fed's subsidy, and mortgage rates are likely to drift back up by at least one percent," Nicholas said.  "A one percentage point increase in mortgage rates - from 5.25% to 6.25% - would cost an extra $127 per month and $45,730 in interest over the life of a $200,000 30 year mortgage.  This is exactly what could happen in 2010 once the Fed stops buying mortgage bonds."

Pretty sick if you ask me!  People seem to be waiting for that magic number or that magic rate or that magic home price to drop to the floor.  Needless to say, this time....waiting can hurt you.