Special Update: Fed Rate Hike

2017-12-20T17:34:11+00:00 December 16th, 2015|Categories: Special Update|Tags: , , , , , , |

After holding the federal funds rate near zero for seven years, the Fed announced a rate hike of 25 basis points, as widely expected. This was the first rate hike since June 2006. Investors are now asking what the pace of future rate hikes will be. According to the Fed statement, Fed officials expect that economic conditions will warrant only "gradual" increases in rates. The statement also noted that the Fed does not expect to reduce its holdings of MBS and Treasuries any time soon. Investors were pleased that the Fed does not appear to be in any rush to tighten monetary policy, and MBS prices and stocks moved a little higher. Want to see live MBS prices on the go? Check out the new look of www.mbsquoteline.com  from your mobile device. All features optimized for your device. | Questions call 800-627-1077

Special Update: Fed to Reduce Bond Purchases

2017-12-20T17:34:12+00:00 December 20th, 2013|Categories: In The News|Tags: , , , , , |

Anyone watching mortgage rates couldn’t miss the news this week that the Fed will begin to “taper, or cut back on their purchases of MBS and Treasury bonds.  All eyes are on the impact this will have on interest rates.  Their plan to purchase $10bb less per month signals the Fed’s growing confidence in the economy.  Important to note though is that this means they will still purchase $75bb per month in MBS and treasuries for the time being, which still amounts to considerable economic stimulus.  Much less publicized, but more immediately significant for interest rates, were two other announcements.  The FHFA announced a .1% increase in the guaranty fee for mortgages delivered to Fannie Mae and Freddie Mac, effective in the spring, which amounts to an automatic .1% increase in interest rates.  Also, Fannie Mae announced new Loan Level Pricing Adjustments (LLPAs) for loans delivered to them, also beginning in the spring.  LLPAs are based on loan characteristics such as credit score, LTV,  loan purpose, occupancy, number of units, product type, etc.  These adjustments will also increase the cost of borrowing for homeowners.  The net effect is that interest rates will likely rise a bit in the near term, [...]

More Fed MBS Purchases?

2017-12-20T17:34:16+00:00 August 9th, 2010|Categories: In The News|Tags: , , , , , , , |

A couple of months ago, Fed Chief Bernanke was answering questions about the Fed's plan to sell its MBS portfolio. He stated that the Fed would eventually return its balance sheet to normal by selling the $1.25 trillion in MBS it had bought to stimulate the economy, but that it would not take place soon. While some Fed officials were pushing for a faster start date, investors believed that the MBS sales were likely to begin early in 2011. As the economic outlook has grown weaker, however, the Fed's likely plans have changed. Rather than discussing a start date for Fed tightening moves, Fed officials are now outlining options and conditions for adding further monetary stimulus. In particular, the Fed had been planning to allow the MBS in its portfolio to mature without replacing them. Due to defaults, refinancings, and maturities, some MBS "roll off" the Fed's portfolio over time. Until recently, investors expected the Fed to let its portfolio slowly shrink in this fashion, which would represent a minor amount of monetary tightening. Tuesday, though, a Wall Street Journal article suggested that Fed officials are considering whether to replace those securities to stimulate the economy. With the next Fed [...]