QE 3 arrives but don't expect rates to improve

The Federal Reserve embarked on its third round of Quantitative Easing yesterday when it announced that it will purchase $40 billion worth of Mortgage Backed Securities each month and vowed to do so until the economy is on solid footing.

Mortgage Bonds soared on the news but are giving back some of those gains today as players look to take some profits after the huge rally.

Thanks to the Fed's enormous commitment, mortgage rates are not likely to creep too high in the near future. But I feel that locking at this time is prudent due to the fact that home loan rates may not get much better. Lenders may be reluctant to transfer all of the pricing gains down to the rate sheet and with the increase of the G-fee, which is negatively impacting more rate sheets around the country, today's all-time lows are pretty darn attractive.

Leonard Winslow
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