The Fed announcement last week about an expansion of the mortgage-backed securities (MBS) purchase program pushed mortgage rates down to the lowest levels in decades, according to the weekly surveys from the Mortgage Bankers Association (MBA) and Freddie Mac. This week, mortgage rates held the improvement, ending nearly unchanged from last Friday.
The Treasury unveiled a major new program on Monday which will establish public/private partnerships to purchase up to $1 trillion in troubled assets from banks. The program was well received by investors, and the news produced a large rally in the stock market. Significant to the mortgage market, removing these assets from banks' balance sheets should free up room for additional investments in mortgage loans.
This week's news in the housing sector was positive for a change. February Existing Home Sales rose 5% from January. Inventories of unsold homes were at a 9.7-month supply, about the same as last month. February New Home Sales also rose 5%. The Mortgage Bankers Association (MBA) revised higher its forecast for loan originations in 2009. The MBA now expects $2.8 trillion in mortgage originations this year, up from about $2.0 trillion in its prior forecast. The increase was due to a projected rise in activity as a result of lower mortgage rates.
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