Florida Mortgage Rate Outlook in Light of the Fed’s Recent Statement

Florida Mortgage - General Patton

“BE WILLING TO MAKE DECISIONS.” General George Patton.

And that’s exactly what the Fed did last week at their regularly scheduled Federal Open Market Committee meeting.

But just what did they decide…and what do their decisions mean for Florida home loan rates?

The Fed announced that they are going to ration out what’s left of their commitment of Mortgage Backed Security buybacks through the first quarter of 2010. What this means is that there will be no additional buying, but instead, a longer weaning off of the program.

There was some speculation about the Fed increasing the amount of buying above the $1.25T of funds previously committed, and last week’s statement is the Fed’s nice way of saying “um… no.”

So what we have is the fact that the Fed will not be buying more mortgage backed securities in quantity. Instead, they’ll attempt to provide a smoother transition to normal market conditions.

Signs Point to Higher Florida Mortgage Rates

It is a given that once the Fed ceases its purchases, that Florida mortgage rates will climb significantly higher…most likely back above the 6% mark.

So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to increase gradually over time. Which is mighty nice of them. Don’t you think?

This gradual mortgage rate increase means – of course – that waiting to purchase or refinance will very likely mean a higher interest rate.

Their decision also means that the Fed’s remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time – and additionally, will not necessarily be spread out as evenly as their past purchases – which could lead to more volatility for rates in the near term.

Remember! With home loan rates still low – but slated to increase with the Fed’s recent decision – as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if you’ve been considering a purchase or refinance. Or do you have a family member, neighbor, friend or coworker who might benefit from getting some good home loan advice? I’m always glad to get your referrals, so simply let me know who I might be able to help.

I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!

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