Mortgage Rates Fall Below 5%

For how long will they remain this low? Most experts say not long.

US News's Luke Mullens has a comprehensive essay on refinancing with valuable links.

Refinance applications are at their highest rates since May. This is primarily because of low mortgage rates.

A key reason for the lower rates is the Federal Reserve's decision to keep buying mortgage-backed securities owned by Fannie Mae and Freddie Mac. This Federal Reserve program is expected to be eased off and abandoned in the next few months.

How much flexibility can the Federal Reserve have with our massive federal deficits?

From USNews.com:

Fed purchase extension: Some of the downdraft is a result of the Federal Reserve's recent decision to extend by three months its program of buying up debt and mortgage-backed securities from Fannie Mae and Freddie Mac. The initiative, which was introduced last November, is one of the primary reasons that mortgage rates have remained remarkably low for nearly a year. While the Fed's decision does not increase the amount of cash devoted to the program, it guarantees that demand for these assets will remain strong for a longer time. As such, the move "ensures that [mortgage] rates will remain low for the foreseeable future," Mike Larson of Weiss Research said September 23, the day the decision was announced.