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(English) What Happens When the Fed Exits the Market?

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7 comentarios
  1. Michael Mekler
    Michael Mekler Dice:

    There is still the other side of the coin. In 2000-2006 we had no First time home, buyer credits or the Fed was not buying these levels of MBS’s and the market was HUMMING to the point that it over heated and pumped a TREMENDOUS amount of air into the bubble. As a mortgage professional, I can’t wait for these variables to go away and things to get back to normal. Yes we might see a month or two of stagnation but things will get back to normal. I think it will be a shame if Bernanke goes away simply because regardless of the curve balls that are thrown at him he is too big a scholar of the great depression to allow the system to fall apart.
    Just my 2 cents.

  2. M
    M Dice:

    Is there a chance the Feds would decide to extend the March 31st expiration of their program (purchasing mortgage-backed securities) to prevent low rates from rapidly increasing? …First, is this possible? Second, how long might they do it for? And third, will that just postone the drop in the market? My thoughts are… if the Fed SEPARATES THE TIMING of the Tax Credit Expiration from the cessation of the above mentioned program …that maybe the market drop would be smaller or perhaps stay steady before they start to rise again? (Note: the Tax Credit will stop during the Standard Peak in the Nat’l market, helping to soften that hit.) In other words, prevent the larger drop as per the Case Shiller Future’s Graph, and shorten the recovery time? Just a hopeful thought… M

    • Steve Harney
      Steve Harney Dice:

      Great points M! The Fed has said they will definitely exit the mortgage market on March 31st. They have hinted that they may come back in if mortgage rates rise to an unacceptable rate. What that means no one knows. They are purposely being vague.

      In regard to the Tax Credit, I believe it will end as scheduled. Some have guessed they might scale it down ($6,000 for 3 months, $4,000 for the next three months, $2,000 for the three months after that). Time will tell.

      Real estate professionals should move forward as though all assistance will end as scheduled and make a plan based on hard work and serving their buyers and sellers. That is the only thing they have ultimate control over.


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