The FED steps up!

As of this third week in February, thirty-year year fixed rate mortgages are still holding at 5% - 5.125% for very well qualified purchasers. FHA and VA loans are still tracking about the same.

The following is a recent commentary from Market Alert:

Commentary: "Treasury prices are rebounding from a selloff yesterday following a fairly dismal $81 billion three-part government debt auction that absorbed investors' attention during the middle part of the week. Oftentimes when we go through a period of heavy supply from the government - followed by a coming week of bland economic news and no new debt auctions from Uncle Sam - the overall market tends to breathe a little sigh of relief. That's an environment that tends to be supportive of steady to perhaps fractionally lower mortgage interest rates.

Earlier this morning China announced it will raise reserve requirements for its banks by 50 basis points, a move to slow growing inflation pressures within the country. The news sparked fears among some stock traders that China's monetary policy could wind up stifling global economic growth. As stock prices fell, the safe-haven appeal of dollar-denominated assets like Treasury obligations and mortgage-backed securities benefited as capital flowed in waves from riskier asset classes."

What is not mentioned in this commentary is the current economic disparity between countries. China is modifying its policy to protect their currency from inflation and devaluation. As the majority of the world is dealing with shrinking GDP numbers and tremendous unemployment, China's economy will grow. The fact that Greece is on the brink of total economic collapse might actually help keep interest rates down at their current historically low levels.

The Federal Reserve has stepped in and said it will continue buying mortgage backed securities "as needed" to keep the United States' recovery on track. This is a huge weight off our shoulders as the March 31st scheduled end to this practice does not appear as concrete as it was before.

Some information in this market update was provided by Brent Ellwood, Regional Manager of PCR Mortgage Services, who can be contacted at (410) 991-9595.