The federal government’s effort to make mortgages more affordable has taken a severe blow in the past week as rising mortgage-bond yields have been propelled higher by surging Treasury rates. The proverbial shot has been fired over the bow of the mortgage industry, jeopardizing the federal government’s ability to maintain historically low mortgage rates.
Today marked the fourth consecutive day in which mortgage bonds escalated. Yesterday, mortgage bonds exceeded the point in which they existed prior to the Federal Reserve’s announcement on March 18 to purchase $300 billion of long-term Treasury bonds, in addition to $750 billion in mortgage-backed securities. The announcement was intended to encourage home purchases and advocate for existing homeowners to refinance by driving down mortgage rates.
In the midst of a harsh recession not seen since World War II, prices of homes continue to plummet, as well. Experts believe it may take another mortgage-bond-buying spree by the federal government to keep mortgage rates low.
–Robert Hyder
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