Possibly! The Federal Reserve said Tuesday it will maintain the pace of it's $600 billion Treasury bond buying program because the economy is still too weak to bring down high unemployment. The Fed's purchases are intended to lower long-term interest rates, lift stock prices and encourage spending. It's decision not to increase its purchases rattled bond investors, who fear a tax cut plan in Congress could fuel enough growth to drive up interest rates.
The worry is that the Fed's bond buying plan won't achieve its goal of reducing long-term rates. After the Fed issued its statement, Treasury prices sank, pushing their yields higher and mortgage interest rates higher today. The 10 yr. Treasury note jumped to it's highest level since May....and the 10 yr. note helps set rates on many kinds of loans including mortgages.
With this said, higher mortgage rates could slow, and potentially derail the economy's progress. It will be very interesting to see how this bond buying plan affects the economy and mortgage interest rates over the next few months. Please let me know if you have any questions about your current mortgage financing situation or if I can be of assitance to any of your friends, family members or co-workers.
Happy Holidays!
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