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.
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.
Mortgage Broker/Banker | San Jose, CA
(408) 615-0655 | Shashank@ArcusLending.com
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