www.lasvegasmtg.com Report: Treasury ends purchase of Mortgage Backed Securities on April 1st, 2010. In 2008 the Treasury stepped in to provide liquidity to the housing market by purchasing the Mortgage Backed Securities due to the fact the secondary market was frozen with investors not purchasing these securities. When this program was started it was to have ended at the end of November but the timing was considered to fragile so it was extended until April 1st, 2010.
When the Treasury Department started the purchase of Mortgage backed Securities rates were at 6.4% and rising as liquidity from the banks and investors were reeling from the failure of the sub prime market. There is little doubt that without any government intervention the housing market would have looked totally different then what it is today.
There was a lot of speculations when the Treasury stopped purchasing the Mortgage Backed Securities that rates would move up by as much as .5% higher. The Treasury has made its intention to stop the Purchase of Mortgage Backed Securities and announced it would end on April 1st, 2010 and that public information seems to have helped keep rates stable. On March 30th, 2010 there was a increase in rates but by April 1st, 2010 the overall increase for the week was only .03%.
Most economists have predicted that 2010 will see an average of 5.375% rate which is only a .375% rate increase over current rates. The Economists also say this is a fragile market and it will take constant monitoring by the Feds to make sure the housing market does not sputter and will have to act quickly to prevent a relapse.
Keeping rates low will help spur the housing market by making housing payments affordable to the first time home buyers which represent 48% of all current house purchases. With the current home prices at 1997 values and low interest rates there is no greater opportunity for the first time home buyers then now!