Will the Federal Reserve's $600 billion worth of "quantitative easing" lead to yet another significant dip in mortgage rates? Probably not, but loan rates may continue to fall, at least slightly.
"It's not going to have a direct effect because they're [most likely] not going to be buying mortgage-backed securities, they're only buying Treasuries," Amy Crews Cutts, deputy chief economist at Freddie Mac, told National Mortgage News.
"It's possible [mortgage] rates could be pushed down a little bit," she said.
This could occur if investors who normally buy Treasuries are chased out of that market by the Federal Reserve's purchases, and who then opt to buy MBS. But even if that occurs, it won't move mortgage rates much, said Crews Cutts.
Federal officials could theoretically buy MBS again, but have so far only mentioned Treasuries and are unlikely to change that strategy without signaling such a move. "The Fed is not worried about mortgage liquidity right now, they're worried about the overall economy," said the Freddie Mac economist.
For the week ending November 4, the average interest rate on a 30-year FRM was 4.24%, up a hair from 4.23% the previous week. (A year ago the FRM averaged 4.98%, according to figures compiled by Freddie Mac.)
Nov. 4 marks the third consecutive week that the 30-year FRM has risen. The 15-year FRM closed the week at 3.63%, down from 3.66% the previous week. A year ago the rate was 4.40%.
Average points were 0.8 for 30-year loans, 0.7 for 15-year mortgages, and one-year ARMs, and 0.6 for five-year hybrids.
The average rate for a five-year Treasury indexed hybrid ARM ended the week at 3.39%, setting a survey-record low. This was down from 3.41% the previous week and 4.35% a year ago.
The average one-year Treasury ARM rate also set another record low: 3.26%. This was down from 3.30% the previous week and 4.47% a year ago.
