Bond Buying Program To Come To A Close - LoanLove.com Sheds Light On The Situation

SAN DIEGO, Aug. 31, 2013 /PRNewswire-iReach/ -- LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. Home buyers and loan borrowers may be soon experiencing sudden changes to their loans and credit with the Federal Reserve's bond buying program coming to a halt. With the fate of the mortgage industry being uncertain, Loan Love has provided a new article titled "Federal Bond Buying Predictions (Volatility Ahead)" that sheds light on the bond buying program and its implications the future for home buyers.

The Loan Love article first starts off by bringing home buyers and borrowers up to speed with the Federal Reserve's bond purchasing program. "They may not be as interesting as international espionage and the cool crime-fighting tools 007 gets to use, but T-bonds (short for treasury) have certainly been in the news lately, thanks to the Federal Reserve and its popular (among homebuyers, anyway) bond-buying program. The Federal Reserve began buying bonds to help stimulate consumer spending in an effort to prop up the sagging economy. The measure was meant as a temporary stopgap until the economy showed signs of improving over the long haul. Now that housing sales have been rising and unemployment has been falling, the Fed has begun to consider phasing out the bond-buying program, a move that has homebuyers, lenders and investors holding their collective breath."

That being said, the bond purchasing program was purposed with the intent of keeping interest rates low, and thus urging consumer spending and bond investing. Since bonds are inversely bound to short-term and long-term interest rates, mortgage rates are affected too; When bond rates rise and stay strong, interest rates fall, which leads to mortgage rates falling too. In the end, this made consumer purchases more desirable.

Concern has been raised with the Federal Reserve seeking to cease their bond purchasing program. When the U.S. economy was in a vulnerable state, the bond buying was meant to encourage buyers to take on loans and get credit with low interest rates. But this move was generally considered to be a temporary solution. With the economy getting steadily stronger, the Federal Reserve is halting their support of the bond purchasing program. What this ultimately means as the article explains is that interest rates will change to match the growing economy.

The article also had this to say on bond purchasing program: "So – that's why interest rates are rising now . What does this mean for the future? Like any security (stocks or bonds), when there's a major shift in the environment in which the security is traded – in this case, the cessation of the fed buyback program – you can expect considerable fluctuations in the market as people take bets to try to earn some fast cash. Over time, though, consumers can expect mortgage rates to level off once again – though at considerably higher rates than, say, a year ago."

As a reminder to all future home buyers, Loan Love recommends home owners with this final tip: "The moral of this story for potential homebuyers: Lock in your rates now as a hedge against rising rates in the future." Once the Federal Reserve ends the bond purchasing program, interest rates are bound to rise in coherence with a strengthening economy.

To learn more on the bond buy program, visit LoanLove.com.
 

Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, contact@loanlove.com

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SOURCE LoanLove.com



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