Wednesday, March 18, 2009

Fed Will Pump Another $1 Trillion into Mortgage Market

The Federal Reserve announced plans today to pump another $1 trillion into the mortgage market. That came as a surprise, but lenders reacted quickly by reducing rates on conforming loans to as low as 4.75%. That's still higher than it should be. The current yield on 10-year Treasurys is roughly 2.6%, suggesting that rates on 30-year mortgages should be below 4.5%. We may still get there. The market hasn't had much time yet to digest the Fed's announcement.

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