Action Lending - Mortgage News

The Fed Raises The Interest Rate

June 30th, 2017 1:36 PM by Gene Tidgewell

Well the Fed raised the Fed Funds rate by 1/4 % last week as expected and they also indicated they will probably have one more increase this year either in September or in December. This also raised the prime rate for everyone and increased the rate on all HELOCS that are still in their interest only period.

The other big news is they announced that sometime this year they would start to reduce their purchases of Mortgage Backed Securities and US Treasuries to gradually reduce their Balance Sheet which now contains trillions of dollars in these items. They are currently purchasing about $30 million in mortgage backed Securities per month.

When they start they will reduce their MBS purchases by $4 million a month and increase it $4 million per quarter until they hit $20 million a month in 5 quarters. By doing this they will eventually wean themselves of MBS without causing a spike in rates. It is expected mortgage rates will increase more gradually following this plan. They will follow a similar pattern with US Treasuries until they have reduced their purchases by $30 million per month.

Remember Action Lending now does REVERSE Mortgages as well as traditional Forward Mortgages

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Posted in:General
Posted by Gene Tidgewell on June 30th, 2017 1:36 PM

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