Fed’s Recommendations will help housing.

by ritasimpson on September 23, 2011

in How's The Market

Fed’s Recommendations Keep Rates Low, Provide Support For Housing Sector

The Federal Open Market Committee (FOMC) moved to keep rates low and support housing through a series of moves to maintain confidence.

Among the moves, the FOMC has:

  • Increased the duration of its securities holdings by selling shorter-maturity securities and buying longer-maturity securities.
  • The FOMC will now reinvest early payment of mortgage securities back in debt issued by Fannie Mae and Freddie Mac.
  • Reinvested maturing and prepaid agency MBS and agency debt in agency MBS, rather than Treasuries, suggesting a bit more support for the housing sector.
  • In the Fed’s opinion, the rearrangement of it current portfolio “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative.”

Bottom line: Low rates are good news for buyers and borrowers. The government is using everything in its toolbox to keep housing on a steady, upward path toward recovery as problems work through the system. This is the time for clients to take advantage of a low interest rate.Federal Reserve

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