Well, another week is nearly gone and we have seen more action, both up and down on the mortgage market. So, where did we end up after the Fed’s announcement yesterday? Well, no surprises, they aren’t going to lower the rate to less than zero. However they did say some things in their announcement that mortgage backed security buyers didn’t care for, like, "economic conditions are likely to warrant exceptionally low levels of the Federal Funds Rate for some time" and that "inflation pressures will remain subdued in coming quarters".
I am afraid that comments like this will continue to keep some people on the sidelines. The other interesting information that came out yesterday was that the Fed would continue to purchase MBS even through June. However, we found out that the Fed was buying 5.5% and 5% bonds and those are the ones that will be paid off in a lower rate so the Fed will get their money back sooner. The one thing this doesn’t do is lower rates to 4.5%.
Economic data continues to be on the down side as we have higher unemployment figures and more announcements of layoffs make the news. We continue to have a very volatile credit market, so hang in there.