California's Mortgage Rates set to go up because of Fed actions

The Fed's statement today does not augur well for California Mortgage Rates. The Fed's policy-setting committee stuck to a plan to end its purchases of mortgage securities by the end of March.

Background - The program to purchase agency mortgage-backed securities (agency MBS)  was announced by the Federal Reserve on November 25, 2008. On Wednesday, March 18, the FOMC announced the expansion of the Federal Reserve's program to purchase agency MBS up to $1.25 trillion by the end of the year. On September 23, 2009, the FOMC announced that the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and gradually slow the pace of these purchases, anticipating they will be executed by the end of the first quarter of 2010.

The purchases have helped to drive down California mortgage interest rates providing an important boost to U.S. housing and financial markets. When the Fed stops buying, rates on mortgages could turn higher. According to Fannie Mae chief economist Doug Duncan Mortgage Rates can go up by 30 to 50 basis points if Fed stops buying Mortgage Backed Securities. In fact, immediately after Federal Open Market Committee (FOMC) Statement today, most of the lenders issued a repricing for worse. For a $500,000 an increase in 50 bps in rate means an increase of  $155 a month on a San Jose home mortgage payment.

In its meeting in December, some Fed officials argued the housing market might not be ready for an end to the MBS purchase plan and suggested keeping it in place for a longer period or even expanding it. With Fed now saying the economy had "continued to strengthen" and business spending was "picking up" ; it is trying to gradually pull back from the many programs initiated between 2007 and 2009 to stabilize the financial system and lift the economy.

So if you were planning to take a mortgage either to refinance or buy a home, time could be running out for low mortgage rates. Call me today at 408.905.6261 or email me at shashank@arcuslending.com and let me shop 100+ lenders for you to get you the best California Mortgage Rates.

 

______________________________________________________________________________________________________

Shashank Shekhar

Mortgage Broker/Banker | San Jose, CA

(408) 615-0655 | Shashank@ArcusLending.com

Ranked among Top 150 Loan Officers and Top 40 under 40 Most Influential Mortgage Professionals in the Country

Check out our 5 Star Review on Google Places and Yelp

Connect on Facebook Follow me on Twitter Watch me on YouTube 

Comment balloon 0 commentsShashank Shekhar • January 27 2010 05:34PM
California's Mortgage Rates set to go up because of Fed actions
share
The Fed's statement today does not augur well for California Mortgage Rates The Fed's policy-setting committee stuck to a plan to end its purchases of mortgage securities by the end of March. Background - The program to… more
San Jose Real Estate and Mortgage Rates Commentary Jan 24, 2010
share
Your weekly dose of San Jose Mortgage Rates and Real Estate Market commentary. The week that was: Wall Street Journal reported that California's inventory of unsold, previously owned homes shrank to a five-year low in… more
FHA changes Down Payment, Credit Score & Seller Contribution…
share
FHA announced a series of changes to their Down Payment, Credit Score, Seller Contribution and Mortgage Insurance guidelines for California FHA Loans Credit Score/DownPayment Guideline Change : New borrowers will now be… more
FHA increases upfront mortgage insurance premium requirements for…
share
FHA today increased it's upfront mortgage insurance premium requirements for California Home Loans. Upfront Mortgage Insurance is the money that FHA collects at the time of closing a mortgage to insure the loan against default. Currently,… more
San Jose Mortgage Rates & Market Update - Jan 18th, 2010
share
Weekly dose of economy and mortgage market news that affects mortgage rates for San Jose Home buyers and Home owners. The Week that was: Freddie Mac weekly Primary Mortgage Market Survey® reported 30-year fixed-rate… more
FHA waives 90-Day Flipping Rule for San Jose, California Mortgages
share
Great news for San Jose First Time Home Buyers - FHA is eliminating the 90 day flipping rule for mortgages on San Jose & rest of California homes. With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller… more
The Good, The Bad & The Ugly of New Good Faith Estimate (GFE) Form
share
HUD implemented the new Good Faith Estimate (GFE) for San Jose and rest of the country Mortgage Loans. This Good Faith Estimate form (GFE) is applicable for both Refinance & Purchase transactions for both FHA & Convetional loans… more
FHA Energy Efficient Mortgage for Sunnyvale, CA Home Buyers &…
share
FHA's Energy Efficient Mortgage program (EEM) helps Sunnyvale, CA homebuyers or homeowners save money on utility bills. This is done by enabling them to finance the cost of adding energy efficiency features to their house as part of… more
San Jose Weekly Mortgage Rates & Market Commentary 01/03/2010
share
Your weekly dose of economy and mortgage market news that affects mortgage rates for San Jose Home buyers and Home owners The Week that was: Another bad week for the bond and mortgage markets. The 10 yr treasury note and… more
Mortgage Rates rise sharply for Sunnyvale, CA homes
share
In last 3 weeks, 30 year fixed mortgage rates have gone up 34 basis points for Sunnyvale, CA homes In the latest results of its Primary Mortgage Market Survey® Freddie Mac reported 30-year fixed-rate mortgage averaged 5. 05… more