On Tuesday November 25^th the mortgage industry received a nice boost! The Federal Reserve is going to buy Mortgage Bonds which will help push mortgage rates lower. The Federal Reserve announced that it would purchase $600 billion of Mortgage-Backed Securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. This brilliant move by the Fed is designed to help increase the availability of credit, while lowering fixed mortgage rates. And just that announcement alone has already lowered mortgage rates.

Mortgage rates had remained stubbornly high even though the Fed has cut their rates and yields on Treasury Bonds have continued to fall. With the threat of inflation being removed due to the drop in oil prices, mortgage rates should have been falling. However, there has been a lack of confidence for money to flow into mortgage bonds. Given the fact that mortgage lending guidelines have tightened up, mortgages as an investment today are much less risky than a couple of years ago, but now that the Federal Reserve is stepping in to back these mortgages which means investor confidence got a big boost.

This action by the Fed should have a substantial effect on the real estate market. First, rates in time could move lower and provide a tremendous opportunity for homeowners to refinance and improve their financial position. Second, this will provide motivation for buyers to get back into the market to buy a home. With home prices around the country well off their highs from a couple of years ago and with mortgage rates near historical lows this will provide opportunities for home buyers that are rarely available in a lifetime.

If this action does its job, this should put a floor on housing prices on a national level and begin to stabilize the housing industry as a whole. This will also help to work through the excess housing inventory in many markets. It is important to keep in mind that all real estate is local and Estes Park market continues to hold up very well and this latest action will only provide our market with additional support.

If you are a homeowner or planning to purchase a home, now is the time to review and evaluate your current housing situation. Once you can get through the persistent negative news in the media one can see that there are tremendous opportunities right before you. Where do you start: contact your local professional mortgage planner to review your current situation and your financial goals. Second: whether this is time to move on a new house or loan you should check your credit so that when the time is right you can move forward.