Industry News
Mortgage Industry News
Mortgage Rates Improve Modestly
10/22/2010
Uncertainty about an expected new Fed stimulus program created a lot of movement in mortgage rates during the week. Fed officials offered few details about the program, though. In the end, despite the volatility, the result was just a small decline in mortgage rates for the week.
In an effort to boost the economy, the Fed is expected to begin to purchase additional Treasury securities soon. The big question is how large the program will be. Investors expect the Fed to reveal the details of the program at its next FOMC meeting on November 3. Comments from Fed officials during the week indicated that they are still discussing what approach to take. The Fed may decide on a fixed quantity over a set time frame, or they may select a more flexible program in which they decide at each meeting how much to purchase. Mortgage rates have already benefitted from investor expectations for the program, and they likely will remain highly sensitive to changes in the outlook for the Fed’s plans.
While foreclosure issues were in the spotlight, this week’s housing sector data generally showed modest improvement. September Housing Starts increased to the highest level since April. The October NAHB Home Builder confidence index rose to 16 from 13 in September, which was the first increase in five months. "Builders are starting to see some flickers of interest among potential buyers," according to the NAHB.
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