Federal Mortgage and Housing Support Programs Will End!

The Federal Reserve’s program of purchasing a total of $1.25 trillion of mortgage-backed securities is supposed to come to an end on March 31^st of this year.  The general consensus is that the Fed’s involvement in the market means that conforming fixed-rate mortgages are perhaps 75 basis points (0.75%) below where they would be if the program did not exist.

This means that you should expect interest rates to rise somewhat when the program expires.  For example, if you bought a House for sale in Eagle Idaho, with a $400,000 loan over 30 years, a .75 increase could result in as much as $70,000 additional in interest!  How much rates rise will depend on whether or not private investors will want to buy these investments, and how strong that demand will be – is all quite foggy at this time.  It’s best to plan for at least some increases in interest rates as the end of the program approaches and for a period of time after March 31, with perhaps as much as a half-point rise to start.

Want more information, give me a call at 208-288-2976 or email me at paul@Idahorealtyinfo.com and we can talk how this can affect your long term real estate plans.  Or, visit my website at www.idahorealtyinfo.com for more information.