Washington Update - 03/20/2009 (Plain Text Version)

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Fed Action Suggests Great News on Mortgage Rates

The Federal Reserve on March 18 announced it was taking aggressive actions to unlock the nation’s sluggish credit markets and putting a major focus on further lowering mortgage interest rates.

In the process, the Fed has sent a strong signal to prospective home buyers that highly favorable financing terms make this the right time for fence sitters to return to the housing market. The Fed said it would buy up to $300 billion in long-term Treasury bonds over the next six months and purchase up to an additional $750 billion in mortgage-backed securities backed by Fannie Mae and Freddie Mac — bringing total agency MBS purchases this year to $1.25 trillion.The Fed said it also plans to double its purchases of Fannie and Freddie debt to $200 billion. Mortgage rates are expected to drop significantly in response to the Fed moves.

In his analysis of the results of Freddie Mac’s Primary Mortgage Market Survey for the week ending on March 19, Chief Economist Frank Nothaft noted that long-term bond yields plummeted following the Fed’s announcement. “Yields on 10-year Treasury bonds fell by about a half percentage point after the announcement,” he said, “marking the largest one-day decline since Oct. 20, 1987. Nothaft largely attributed reports of slower industrial production for a decline in last week’s long-term mortgage rates to near-record lows. The 30-year fixed-rate mortgage averaged 4.98% in the latest Freddie Mac survey, down from 5.03% the previous week. One-year Treasury-indexed ARMs averaged 4.91%, up from 4.80% in the prior survey.

To view the Fed announcement, click here. For more information, contact John Dimitri at 1-800-368-5242 x8529.

Keep Housing a National Priority Theme of Legislative Conference

NAHB issued a Legislative Alert for its upcoming Legislative Conference on Tuesday, March 24 urging NAHB members who cannot attend the event in Washington, D.C. to call their federal lawmakers at their Capitol Hill offices in order to amplify our message that our industry is united in its effort to revive housing and save the economy from recession. Our federal lawmakers need to understand that housing is the key to our economic future. As housing goes, so goes the economy. Issues that we will cover include housing's critical role to the economy, the AD&C crisis, preserving the mortgage interest deduction, reforming the housing finance system, reinstating the downpayment assistance program, the National Green Building Standard and opposing card check legislation.

As a reminder, all the legislative conference information can be found at www.nahb.org/legcon. To view talking points and briefing materials, click here. A strong builder turnout on March 24 will send a powerful message to members of Congress that housing must remain a top national priority. For more information, contact Molly Murray at 1-800-368-5242, x8282. [return to top]