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Wednesday, February 17, 2010

Canadian Mortgage Broker News - U.S. government plans exit from mortgage markets

Canadian Mortgage Broker News - U.S. government plans exit from mortgage markets

U.S. government plans exit from mortgage markets


After investing more than $1 trillion to keep mortgage rates low, the U.S. government is expected to pull back and exit over the next two months.

The program of buying mortgage-backed securities in an effort to reduce fixed-rate mortgage rates is set to end this quarter.

If that happens, many in the housing industry are concerned about what impact it will have. The government's housing assistance enabled homebuyers to get cheap loans and help revive much of the U.S. housing market, but the lasting impact is unclear.

A rise in interest rates, however small, would likely do damage to the fragile confidence of those considering buying real estate in 2010. The Federal Reserve said last week that it will keep the target rate for overnight bank lending near zero to help nurture the recovery.

Foreclosures will probably reach three million this year, surpassing last year's record of 2.82 million, according to RealtyTrac Inc.