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Fed Actions Suggest Great News on Mortgage Rates
The Federal Reserve on March 18 announced it was taking aggressive actions to unlock the nation’s sluggish credit markets and putting a major focus on further lowering mortgage interest rates.
In the process, the Fed has sent a strong signal to prospective home buyers that highly favorable financing terms make this the right time for fence sitters to return to the housing market.
The Fed said it would buy up to $300 billion in long-term Treasury bonds over the next six months and purchase up to an additional $750 billion in mortgage-backed securities backed by Fannie Mae and Freddie Mac — bringing total agency MBS purchases this year to $1.25 trillion.
The Fed said it also plans to double its purchases of Fannie and Freddie debt to $200 billion.
Mortgage rates are expected to drop significantly in response to the Fed moves.
In his analysis of the results of Freddie Mac’s Primary Mortgage Market Survey for the week ending on March 19, Chief Economist Frank Nothaft noted that long-term bond yields plummeted following the Fed’s announcement. “Yields on 10-year Treasury bonds fell by about a half percentage point after the announcement,” he said, “marking the largest one-day decline since Oct. 20, 1987."
Nothaft largely attributed reports of slower industrial production for a decline in last week’s long-term mortgage rates to near-record lows.
The 30-year fixed-rate mortgage averaged 4.98% in the latest Freddie Mac survey, down from 5.03% the previous week. One-year Treasury-indexed ARMs averaged 4.91%, up from 4.80% in the prior survey.
For more information, e-mail John Dimitri at NAHB, or call him at 800-368-5242 x8529.
 Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit – including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
“The new tax credit provides a great opportunity for first-time home buyers,” said NAHB Chairman Joe Robson. “Combined with today’s near record low interest rates, the large selection of homes on the market and very competitive pricing, the tax credit should provide the extra incentive needed to get prospective buyers who have been sitting on the fence into the market.”
Industry professionals are encouraged to highlight the tax credit Web site when marketing to their potential first-time home buyer market.
 Plan to Attend Construction Forecast Conference
Plan to attend or watch the 2009 Spring NAHB Construction Forecast Conference & Webcast on Thursday, April 23 in Washington, D.C. to get the latest facts, insights and analysis of the housing industry.
Panels of nationally recognized experts at the day-long conference will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
For more information and to register, visit www.nahb.org/cfc.
 Want to Know the Housing Starts Through 2017?
Find out in HousingEconomics.com's Long-Term Forecast.
Subscribe and get downloadable Excel tables that feature the housing starts forecast, gross domestic product (GDP), demographics and more.
To learn more, visit www.housingeconomics.com.
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