The following excerpts are from a recent article for mortgage professionals in the Mortgage Market Guide by highly respected and ultra successful mortgage professional Harry Habib.

 “Any school kid knows the old saying… March comes in like a lamb and goes out like a lion.  But since this is the last month of the Fed’s Mortgaged Backed Securities purchase program, interest rates in March could very well come in like a lamb and go out like a lion.  There has been considerable jawboning about how there will be no negative reaction for interest rates when the Fed’s buying stops….we feel strongly that rates will move higher – albeit gradual.  We often hear, “Do you think rates will go higher once the Fed’s stop purchasing?”  The answer is… they already have.  In fact, rather than a buyer, the Fed said they will gradually become of seller of Mortgage Backed Securities.  The Fed...will have $1.25Trillion in Mortgage Bonds on their books… consider this enormous supply that will be unloaded over time, in conjunction with the new Treasury supply every two weeks – there is only one way to attract buyers…and that is to offer higher rates.  Bottom line – if you have been sitting on the fence waiting to purchase a home and holding out for a lower rate… now is an ideal time to understand what is happening in the bond market.” 

As someone in our office succinctly put it the other day, "home prices may have not hit bottom yet but they they are alot closer to the bottom than they were at the top of the market".