Sunday, September 23 2012
According to an announcement made last week, the Federal Reserve will purchase $40 billion a month of mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac in an effort to support a stronger economic recovery, to help ensure that inflation, over time, is at a mandated consistent rate, and to keep downward pressure on interest rates to help boost the housing recovery.
The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions have improved, primarily in unemployment.
This is good news for consumers, as it should keep mortgage rates at their current extremely low levels for the foreseeable future.
Additionally, CNBC Real Estate Reporter Diana Olick speculates that this decision could drive more investors to commercial real estate.
In a follow-up statement, the Federal Reserve released its latest economic projections, which foresee slow growth including a jobless rate that stays above 7 percent into 2014. The economic projections expect growth to remain slow, but to improve due to the stimulate measures announced.
You can read these reports for more information on the subject:
(links open in new windows)