Oct
30
Real Estate Interest Rates – Where are they going?
By
The Federal Government ended its purchase of Treasury Bonds. Which, if history is applicable, this might mean higher interest rates on Real Estate. Whether you are buying in the Santa Clarita Valley or Elsewhere – this will impact your home buying decisions.
This is not a direct impact – but a result of where the Mortgage Investors also place their money, which is into Treasure Bonds.
The questions is will the yield on the Treasures increase? If that happens Money is drawn away from Mortgage bonds and up goes the Rates.
Today is October 30 – Friday and the final day.
RSS Options
Connor
Allow me add a little more depth on this topic. In addition to stoping the Treasury buying program. The Feds have also scaled back their mortgage bond buying program to the tune of about $18B per week as opposed to the $25B-30B per week that they had been doing for the past year.
The scaling back of the MBS buying progam was done to extend the program to March of 2010 and to transition the money supply back to investors. Basically this means the Govt subsidy is going away and if investors don’t pick up the slack the money supply will be reduced and the cost of that money ie.. interest rates will go up.
At this point, there doesnt seem to be much appetite on Wall St. for mortgage backed securities. It will be intersting to see how things pan out in the 1st quarter of next year.
Stay Tuned..
Martin