The Fed Action Fails to Drive Mortgage Rates Down Significantly

Last week’s announcement by the Fed that it was committed to buying an additional $750b of mortgage-backed securities (MBS) and up to $300b of Treasuries had a brilliant one-day impact on mortgage rate. For the remainder of Wednesday, mortgage rates “plunged” (in the words of the Sacramento Bee) by one-quarter to one-half percent. Okay, we all define “plunge” differently perhaps.

But since then, we have given some of that back.  Today, Wall Street appears to like Geithner’s plan for the purchase of bank toxic assets because the stock market is rallying, nudging mortgage rates up slightly from Friday.

I recommend checking Freddie Mac’s Primary Mortgage Market Survey to cut through the advertising hype to see what mortgage rates are truly doing.  If someone is quoting something substantially different, there is more to the story.