September 2012

Chicago Illinois Mortgage rates Week in Review for he Week Ending 09/21/2012

The Fed’s new program of Quantitative Easing is progressing as intended. Under the new program the Fed will be buying mortgage backed securities, not treasury bonds, so the money is flowing directly into mortgages and rates have dropped to new record lows. The market was choppy for most of  the week following the Fed’s announcement, but it went into full rally mode on Thursday and Friday after speeches by 2 members of the Fed Open Market Committee who were previously hawkish, stating that they were fully behind the program and believed this would stimulate the economy and bring down unemployment without risking higher inflation. Rates are at record lows, but there are some hurdles that may keep them from dropping much further. The mortgage industry is operating near capacity now, and it takes time to ramp up by taking on new processors, underwriters and closers to handle any increase in…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 09/14/2012

Fed Chairman Ben Bernanke donned his Superman cape again this week, and announced a new wave of quantitative easing that goes well beyond the two previous attempts. This program is designed to boost a sluggish economy by injecting a huge wave of money directly at the housing market, to lower mortgage rates and spur growth. The Fed will buy $40 billion dollars of mortgage backed securities (not treasury bonds) each month. The Fed, through previous programs, was already the big gorilla in the mortgage market, they are now King Kong on steroids. In addition to this stimulus, they made the commitment to keep rates low through 2015, and to keep an accommodative low rate policy in place for a considerable period of time, even after the economy shows signs of strengthening. This is a big flashing sign that they are not worried about inflation down the road, and getting unemployment…

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Chicago Illinois Mortgage Rates Week in Review for the Week Ending 08/31/2012

After rising for most of the last month, mortgage rates are settling back down and moving closer to their previous all time lows. As has been the case for most of the last year, the improvement in rates is a result of perceptions of what the market collectively thinks will happen in Europe, and what action the Fed is willing to take. Mortgage rates started popping higher in early August when the European market’s head banker made comments that a deal was near which would once and for all solve the crisis. It turns out that words are cheap, and no solution was close, let alone agreed upon. The problem in Europe remains the same, the debtor countries need massive help, but the only way they can get the help that they need is by having the more solvent countries take a hit to their own economies by subsidizing new…

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