Last Week in Review: Stabilization in the MBS Market
One of the major effects of the coronavirus was the enormous destabilization of the mortgage-backed securities (MBS) market back in mid-March.
MBS pricing and trading activity determine home loan rates, so a big and fast solution was necessary.
Thankfully, the Federal Reserve quickly came to the rescue by purchasing MBS to help stabilize the MBS market -- and it worked! Their massive MBS Bond buying program stabilized the market, helped the lending industry in numerous ways, and kept home loan rates in a sideways range throughout April.
Now the Fed, who was buying as much as $50 billion per day in MBS, purchased less than that amount this entire past week.
What does it all mean for homeowners or would-be homeowners today?
With the Fed buying significantly less MBS, there is a limit to how low home loan rates can go in the near-term, making today an incredible opportunity to capture historically low home loan rates.
Besides a sharply smaller Fed MBS buying commitment limiting the improvement to home loan rates, here are three additional reasons why home loan rates might not improve much further in the near-term, making today a great time to secure a home loan:
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