Fed's Action Will Cause Rates To Drop Lower

"The fed agreeing to buy up to 750 billion in mortgage backed securities will result in creating a technical short in the mortgage securities market. By sucking out the supply, it will raise the price of MBS and cause the inverse lowering of rates. This is not a long term improvement and will be technical in nature. Once the demand is over – after the fed has spent the money – rates will revert back to where they were. This is simple math. People should not wait long once rates drop to make the move if they want to take advantage of them." Dave Stevens

The above was written by Dave Stevens, Long and Foster's COO. Stevens was formerly an economist for Freddie Mac and was an executive VP at Wells Fargo. To read a Yahoo article about this rate drop click here.