The Standard & Poor's 'downgrading' of US debt didn't have the 'sky is falling' impact that many feared. In fact, just the opposite occurred with unprecedented buying of US Treasury Bonds occurring on the Monday following the S&P downgrade.
That investment in US Treasuries had the net impact of lowing mortgage-interest rates down into the low 4's (today 4.125%) for a 30 year fixed-rate conventional mortgage (4% for FHA & VA loans).
The Federal Reserve has announced its intention to continue to "keep rates low" at least into 2013, betting that the low cost of money from the government into the banking industry will spur the economy.
Already having spent $2.325 Trillion on the purchase of US Treasuries, The Fed is now considering "Operation Twist" which would shift the Fed's portfolio to more long-term Treasury debt from shorter-term Treasury debt. Expect more information from the Fed at its Governer's meeting on September 21 & 22.
As always, I'm happy to speak with you personally on any questions or concerns you might have on the Mortgage-Lending environment. Please feel free to call or email.
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