Mortgage Market off of Life Support

The Federal Government has officially stopped buying mortgage backed securities as of March 31st 2010. This government action is credited with keeping the broader housing market alive over the last year by keeping liquidity in the market and continuing to fund first time home-buyer mortgages. These purchases, stimulated by additional tax credits have accounted for up to 50% of purchases in many markets across the country and have provided key support to the broader housing market. Interest rates should be watched closely as the financial markets will determine demand for these securities and thus affect mortgage interest rates. The good news is that prices have not jumped nearly as much as people initially thought they might. Optimistically speaking... this will be a smooth transition.