In February I posted in my 2010 Market Forecast that I thought mortgage rates would remain low this year in spite of the phase-out of the Fed’s massive involvement in the mortgage-backed-securities market. That phase-out was completed earlier this week, and just today I read an article that supports my theory. Yes, the Fed is out, but private investors are back buying mortgages, and willing to do so at lower yields meaning lower interest rates for borrowers.
The article has a fair amount of financial jargon, but the crux of it is investors are back buying mortgages because of 1.) more capital due to improving financial markets; 2.) lower risk due to tighter lending requirements and stabilizing real estate markets; & 3.) continued subdued inflation. Read the whole Bllomberg article written by Kathleen M. Howley by clicking this link.