The Fed will buy another $750 billion of mortgage-backed securities in order to keep interest rates low!

For bond traders, expectations were running high that the Fed would offer new programs or expand existing bond buy-back programs. And the Fed delivered on both counts in a huge way. In a new move, the Fed said they would spend up to $300 billion during the next six months to buy long-term Treasury bonds. They also stated they will expand the existing $500 billion buy-back program for mortgage-backed securities with another $750 billion, bringing their total commitment to a staggering $1.25 trillion. The Fed will also raise its buy-back of direct Fannie and Freddie debt to $200 billion. All of these moves are designed to lower interest rates for mortgages and other forms of consumer debt to help the economy recover from a deep recession. We should now see conventional 30-year rates stabilize near historic lows providing excellent refinance and purchase opportunities.

Have a great day!

Greg Lartilleux – greg@afirealestate.com