Mortgage Rates Surge to New Long-Term Lows After Fed

Mortgage rates broke a week-long streak of silence today following a policy announcement from the Federal Reserve.  Even before today’s Fed announcement, we knew we’d likely be seeing a move in rates.  We just didn’t know in which direction, or at what pace.  As it happens, we were treated to the best case scenario on both accounts (i.e. rates moved lower at a fast pace).
As we discussed yesterday, it was the Fed’s balance sheet that got most of the attention from financial markets.  This refers to the Fed’s loan portfolio consisting of Treasuries and mortgage-backed-bonds (both forms of loans that entitle the Fed to collect interest and principal payments).  As those payments came in, the Fed had previously been putting the money back into new loans (buying new bonds to replace the old ones).  They began to decrease those reinvestments in 2018.  This was/is referred to as “balance sheet runoff” because it makes the balance sheet smaller….(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.
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