Lower Mortgage Interest Rates Coming

Federal Reserve Chairman Ben Bernanke Releases New Program (QE III)

A new program released yesterday that will bring mortgage rates lower. The plan is to buy back more mortgage-backed securities than are being purchased now at a rate of $40 billion a month. According to Bernanke, this would continue until the economy recovers. Excerpts from two of the online news sources are below, and there is also a good article in the Wall Street Journal today.

“The main beneficiaries of the Fed’s new program will likely be borrowers who refinance their high-rate mortgages, said Jed Kolko, chief economist for Trulia. In recent months, the number of people who have been refinancing has been running at about twice the rate of homebuyers who have been receiving loans to buy a home.

“They can refinance and free up cash,” he said. That could give a small boost to the overall economy because a lot of that cash will go to spending on cars, vacations, furniture and other consumer goods.” [1]

“In a strategy shift, the Fed’s latest round of quantitative easing, commonly referred to as QE III, will target mortgage backed securities rather than U.S. Treasuries. And, importantly, the Fed said it plans to keep interest rates low even after a recovery gains momentum.” [2]

In all likely-hood, we will not see the results of this program until second quarter of next year. Either way, this may be a good time to look at refinancing your mortgage.


Sources: [1] Les Christie with money.cnn.com; [2] Dunstan Prial, Adam Samson with foxbusiness.com