Okay, this Mr. Sack guy is the guy who manages the Fed’s day to day dealing with the financial markets. Here’s what he had to say about rates yesterday:
- 10 year Treasuries were .50% lower than they would have been without the program.
- Mortgage rates would be 1% higher if it weren’t for the Fed’s purchase of mortgage backed securities.
The only questions that I see coming from this are:
- Will those differences automatically reverse themselves when the program stops? It’s not necessarily a given that they will unwind immediately when the buying by the Fed stops.
- How long will it take for those positions to unwind? Will rates climb over 30 days? 6 months? 12 to 18 months?
- If you are contemplating either refinancing or purchasing relatively soon, why haven’t you done something yet? Take a look at the list of Bloodhounds on the right side and call any of the lenders on the list or call your favorite local guy, but don’t wait too long. The window of opportunity is going to be closing some time soon and probably sooner than we all think.
Stay Tuned……
Tom Vanderwell
The Fed’s Market’s Guy Eyes Asset Sales and Rate Increases – Real Time Economics – WSJ
Mr. Sack is a key voice on the Fed’s expanding balance sheet, because he manages most of the central bank’s interactions with financial markets and thus many of its asset purchase and money lending programs……
Mr. Sack’s group estimates that the Fed’s purchases of $300 billion in long-term Treasury securities earlier this year helped to push yields on 10-year Treasury notes down by about half a percentage point……
Some critics have argued that the Treasury purchases didn’t have the intended impact of pushing rates down.
But Mr. Sack – a long-time proponent of such purchases – said his estimate is supported by regression analyses by the Fed.Purchases of mortgage backed securities, he says, pushed those rates down by a full percentage point.
Technorati Tags: Mortgage Rates, The Federal Reserve
Robert Worthington says:
Tom, I agree highly. What are Americans waiting for who haven’t refinanced? 4 months ago was the right time and still is now even.
December 3, 2009 — 9:03 am