This blog covered in a post last month the fact that the Fed has indicated a commitment to keeping long-term interest rates in the housing market low. In fact, as we also reported, the Fed rate hike was unlikely to affect long-term, fixed-rate mortgages. However, markets are complicated, and the Fed has more than one lever. As a result of its QE program, the Fed now owns $1.7 trillion in mortgage backed securities. And they’re not selling. Which is causing banks to get out of the business  Which will reduce liquidity, and may cause interest rates to rise.

 

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Jim Crowder

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