Mortgage Backed Securities… What the Fed’s Purchases Mean to You

Courtesy of Summit Mortgage

You’ve probably heard that the Fed is buying up billions of dollars worth of Mortgage-Backed Securities. But how does this really impact home loan rates and your mortgage?

Basically, the Fed’s actions provide a demand for Mortgage-Backed Securities, which should help keep the ceiling on home loan rates from moving much higher in the foreseeable future. That’s good news for home buyers who are looking to purchase a home at a bargain price, as well as those who can benefit from a refinance.

However…the Fed’s actions do not necessarily mean home loan rates will move significantly lower.

It all depends on which Bond coupons the Fed purchases. If they purchase higher rate coupons–as they have been doing–their continued purchasing will likely keep a lid on rates, but won’t necessarily push them significantly lower.

The fact is, rates are within inches of all-time historic lows, so don’t wait to miss a great opportunity to purchase the home of your dreams, or get more money back in your budget by a smart refinance.