The mortgage rate roller coaster continues as bond yields dip 20 basis point last week. This dip comes as a result of the US Fed’s announcement that it will continue to support its bond buying program known as quantative easing. The announcement surprised and rallied markets reversing upward march of bond yields. Lower bond yields remove upward pressure on mortgage rates and will eventually allow competitive lenders to lower their fixed mortgage rates.
Although the news is positive for mortgage holders and real estate market participants it is bad economic news. Quantative easing is a temporary measure put in place to aid a suffering economy. The Fed admits that economic prospects are weak and the economy at large will not recover without significant government intervention. This intervention comes at a cost that will eventually come due to American taxpayers.