The Chairman of The Federal Reserve, Ben Bernanke said in a rare news conference today that the 600 Billion Bond-Buying program will end in June. As mentioned in previous posts, the Fed has been trying to keep Mortgage Rates artificially low by buying enormous amounts of mortgage backed securities.
Mr. Bernanke felt this aggressive program would also give investor confidence to purchase the mortgage backed securities. According to a Wall Street Journal article I came across, investors are starting to come back into the picture and have started to buy the mortgage backed securities. This as a whole is a great sign for the markets.
The question is, how is this going to affect mortgage rates? this is a tough question to answer. My personal opinion is that rates have been at all time lows and will most likely go up in the near future. We are seeing some inflation in the horizon and the Fed will be using rates to combat this issue. Bernanke might not do it now. But rest assured he will pull the trigger, when we least expect it.
For now, it will be interesting to see what happens with mortgage rates once the Fed exits in June. What do you think? I would love to hear from you.
Jose
