April 28th, 2011 10:14 AM by BILL WILBANKS
We got out a few things out of yesterday's FOMC meeting and follow-up Bernanke news conference. The Fed intends to end their quantitative easing program (QE2) at the set time in June, not early as some had been hoping for. And that they believe recent commodity spikes are short term and though they will continue to monitor inflation, they don't appear to be concerned about it at the moment. And last that they would not be playing with the Fed rate for at least a couple more FOMC meetings. None of these were real shockers.
The question the real estate market will eventually have to face of course is what happens to the market when the Feds stop buying up bonds after June and therefore supporting the mortgage market. Who will or even can step in to take up the slack at that point? Pundits continue to push for the government to get out of the mortgage market to a much greater extent, expecting the private market, whatever that will become, to step in and pick up the slack. But, be assured that when the Fed closes that shop and stays home, pricing will have to rise to attract private investment to step in to pick up the slack. Many believe that could easily bump it up from the high 4's on the 30 fixed to 6 or 6.5% or even higher quickly. This discussion can go on for hours on end. Suffice it to say that the historic rates we have been enjoying being available the last couple years can only go up with the void left by the exit of the Fed support we've enjoyed. Fence sit at your own risk everyone! If you think the real estate market is slow now...just wait.