The Fed has made it clear that its intention is to continue to keeps rates low. The Fed has various tools to do so, but the most common is to simply buy large quantities of mortgage backed securities. More demand will increase the cost of bonds. Higher bond prices mean lower rates.

The Federal Reserve recently announced that it will launch a program to buy up to $600 billion in mortgage-backed securities and GSE direct obligations to help buoy the flagging mortgage market. The bond market generally reacts inversely to that of the stock market.

Once the economy starts to pick up steam watch for rates to rise. One of the Fed’s primary goals is to keep inflation in check. Its primary tool for doing so is to increase interest rates.

To reach Gary Freedman please e-mail him at gary.freedman@tridentmortgage.com or via phone 609-487-7202.

The opinions and views expressed here are solely those of Gary Freedman and do not represent those of Trident Mortgage or any of its affiliates, officers, members or employees. Gary Freedman is not a CPA, Attorney or Financial Advisor. The information provided is deemed to be generally accurate but should not be relied upon to make any decisions. You should consult your CPA, Attorney or Financial Advisor before acting on any of the information provided herein.