With the incredibly bad jobs report from last Friday over at the Labor Department it was almost a foregone conclusion here this week on Thursday the Fed was going to take action to DO SOMETHING with the glum employment market. Today they did. It is called Quantitative Easing 3.
From my lender sources what QE3 means
The Fed has finally pulled the trigger, and has announced Sept 13th as part of their Open Market Committee meeting that they will implement QE3 (Quantitative Easing 3). In simple terms, this is a program where the Fed has committed to purchasing bonds to ultimately help the economy. They have been considering this action for quite some time, and have finally elected to do it.
The effect this has on mortgage rates is to help keep them low. On initial reaction to the news from the Fed, the mortgage bond market is improving significantly, thus creating a downward movement for mortgage interest rates. We've seen mortgage rates go thru cycles recently where they began rising, then started falling again. Today's Fed action will likely help to push them back near their all-time lows. On a side note, don't be confused when you hear that treasury bonds aren't reacting as favorably. It's important to know that it is "mortgage bonds" that drive the "mortgage rates".
You'll hear different "arguments" about the longer term impact of the QE programs (QE1, QE2, and now QE3). This action by our Federal Government is ultimately inflationary (we're seeing gold prices jumping higher right now as a safe-have against inflation), which could have quite negative backlash down the road. For now, though, we can continue to enjoy these extremely low mortgage rates.
IT IS A GREAT TIME FOR A PURCHASE, REFINANCE, OR ANY OTHER TYPE OF MORTGAGE FINANCING.
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