So, I was getting ready to post the Part II of III about the Future of Miami Mortgage Rates and two things came to mind.
- The only people that care about [What I alluded to in Part I] how the FED influences long-term mortgage rates are… well… fellow mortgage people and economics professors.
- With the cliff-hanger I left in Part I about the time bomb coming March 31 – I thought it best to let those know that are reading this as fence-sitting Miami Beach home buyers as much time as possible to digest the info and decide what is the best Miami Beach home buying strategy for them.
Okay, so what is The Future of Miami Mortgage Rates Part III, Chris!? Well – I am glad you asked. The FED has stated and reiterated in their most recent FOMC minutes that they intend to stop purchasing Mortgage Backed Securities [MBS] at the end of March. This is important because a primary reason that we enjoy low Miami Mortgage Rates today is because the FED is currently buying those MBSs. See, no one else is a large consumer of those bonds at this time and when countries [mainly] have a limited appetite for our bonds, we must entice those would-be-investors with, you guessed it, higher rates of return.
Translated – Higher Mortgage Rates in the future.
Now – the FED has not mixed words about this – AT ALL! They have made it very clear that their buying spree is over 03-31-2010. Well, the response from the markets has basically been, “Ben – we love you -buttttt, we don’t believe you.”
The markets are pretty smart and here is the point. The FED has been buying the MBSs for around a year. If/when they stop, it is likely that all of those dollars spent will have been for nothing. Here is my prediction. The FED is somewhat bracing and somewhat head-faking the markets. When they stop at the end of March, they are going to watch diligently to see what the markets do. David Stevens, the new FHA commissioner for HUD stated that a.25 – .75% increase in rates is an acceptable increase in rates if the market stabilizes there. If not, there is a good chance that the FED may step back in. Again – just my opinion.
Translated – Higher Mortgage Rates in the future.
All that to say, now may be a good time to engage with Ines to see if now is the right time to find the perfect Miami Beach home for sale… before the low Miami home loan rates are low-no-’mo!
[...] you recall from a previous post we talked about what rates may likely do after the FED stopped buying mortgage backed [...]
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