Fed Surprises Markets; Interest Rates Drop

Millions of homebuyers and homeowners will benefit

The Federal Reserve surprised world financial markets this afternoon by announcing at its monthly meeting that the Central Bank will continue its program of purchasing mortgage-backed securities and U.S. Treasuries, also known as QE3. The move triggered a rally in the bond markets and mortgage rates dropped as a result.

The Fed’s announcement was quite unexpected—many investors had assumed weeks ago that the Fed would vote to “taper” its QE III program at today’s Federal Open Market Committee meeting, beginning with a reduction of $10 billion.

While Wall Street investors were left shaking their collective heads, Main Street homeowners were celebrating. After all, lower interest rates are good for refinancing. Homeowners who were scared off by the recent spike in interest rates can now refinance at interest rates that are approaching historic lows. And homebuyers, especially first-time homebuyers, can afford to purchase a home with a higher price tag because lower interest rates enable homebuyers to qualify for a higher mortgage amount.

As someone famous once said, “A good thing doesn’t last forever.” The Fed has clearly signaled that QE3 will remain in effect only until the nation’s economic growth prospects improve. Homeowners would be wise to act now, if they haven’t done so already.

To learn how the Fed’s latest move could benefit you and your family, we encourage you to contact James B. Nutter & Company today.

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