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Federal Reserve Continues to Buy Fannie and Freddie Debt

This week the Fed continued it’s buying binge, purchasing $5.15 billion of Fannie Mae, Freddie Mac and Federal Home Loan Bank’s debt this Monday. This is the eighth purchase of government securities since a buyback policy was announced last month. As part of a bid to help lower borrowing costs, the Fed purchased about $60 billion, so far, of the estimated $200 billion it stated it would buy by the end of 2009. Treasuries advanced as Monday’s news was made public. The purchase of this debt will likely help mortgage interest rates remain relatively low during the next few months.

 There is always the threat that inflation may pick up due to the massive government spending bills. Higher inflation tends to mean higher interest rates…so those of you considering purchasing a home in the next 6-8 months, you may want to consider making the move sooner than later. Many Boston real estate buyers are still sitting on the fence, waiting to see if they can buy exactly when the market hits bottom. The real estate market is not the stock market. You may not be able to wait to purchase the home you love at a certain price, because it is one-of-a-kind. Unlike a stock, when someone else buys a home it’s gone. You missed your chance. In real estate we tend not to see huge price swings in short periods of time. If you feel comfortable in your job, have at least six months of living expenses in a cash savings account, and plan to live in the home for a few years….you are in a great position to purchase. Many people consider the risks involved in buying, but there are also many risks involved in waiting. Just think the difference a 6.5 percent interest rate would make in your monthly payment when the national 30-year-fixed average is now around 4.95 percent.

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