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Mortgage Rates and The Federal Reserve, Understanding the Latest Lowest Rates
Mortgage Rates and The Federal Reserve, Understanding the Latest Lowest Rates

Friday, October 05, 2012
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The Federal Reserve announced it would buy 40 billion in mortgage backed securities per month last month in an effort to ease the cost of home buying and home owning. As a result, the averages for both the 30 year and the 15 year fixed rate mortgage have continued to drop. Mortgage Finance backer, Freddie Mac announced that the 30 year fixed rate mortgage dropped this week to 3.36% from 3.40% last week. Further, the 15 year fixed rate mortgage slid to 2.69% from 2.73% last week. Buying a home literally has never been more affordable, and this is excellent news in terms of economic recovery.
The reason the Federal Reserve buys these mortgage securities is for the purpose keeping the interest rates low to produce optimum conditions for home buyers, a practice called quantitative easing. When people are buying homes, it shrinks the inventory of available homes, thereby increasing development of new projects, which leads to increased spending, and finally, to more hiring. This is proving to work, since we have witnessed dramatic increases in existing home sales and new construction, and a dramatic reduction in inventory, most particularly in Fort Lauderdale and South Florida. Home prices nationally are back where they were nine years ago and continue to rise. Home prices are on the rise, though still well below the peak prices in 2005, and acquiring financing has never been more affordable. For information on home buying in Fort Lauderdale or if you are interested in selling, please contact me directly.
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