bentleyWIRE | blogged

I thought this to be a great visualization for those still in the dark about what has led to the current U.S. housing crisis. 

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

In my 12/16 "Fed Commits to Slaying..." post, I indicated that "at no point during this credit crisis has it been more evident that the Fed is fully committed to propping up this country's economy!" That day may have been trumped by yesterday's announcement that they are more than doubling their purchase plan for mortgage debt bringing the total budget close to $1.5T!!!

Why is this good news for mortgage rates? In a nutshell, the Fed continues to "create demand" for mortgage debt. As demand increases, so do bond prices. As bond prices increase, their investment yields decrease and ultimately that trickles down to a lower mortgage rate.

Bond markets went nuts yesterday and we were expecting mortgage rate improvements from lenders. A few re-posted rates lower yesterday. However, the majority simply waited for today's morning price sheets. Rates are good and have improved 0.25% on average over yesterday morning's rates. Here's the link to Bloomberg's article on the subject.

Have a nice day!

Home prices in selected cities showing year-over-year changes.

Link to NYTimes page.