DALLAS, TX — Feb. 11 (FreeRateUpdate.com) - As the snow falls down here in North Texas there are talks about mortgage rates going up! Yesterday Federal Reserve Chairman, Ben Bernanke, spoke about the impact of raising the Federal Funds rate. The Fed Fund rate is the price at which banks 
earn interest on their overnight deposits for their surplus reserves. With the price of deposit rates potential increasing you can historical expect a hike in mortgage rates. The Federal Reserve has the option to sell Mortgage Backed Securities to reduce their balance sheet. They have not decided to sell them currently but they can do so at any given point. I would imagine if they did sell of the MBS’s it would be a gradual process due to the fact that their purchases have gradually over the last year. This will give rise to mortgage rates steadily instead of an instant jump from 5.00% to 6.00% like we witnesses in late May of 2009.
For the past 4 days mortgage backed securities bond prices have decreased. When the price of bonds goes down mortgage rates move in the opposite direction. I expect to see this trend continue throughout the 1st quarter and into the 2nd quarter of this new year. This is a wake up call for all the home buyer sitting on the fence or the people still contemplating a refinance.
If you have more questions or concerns about the current state of the mortgage market please feel free to contact me directly. Have a great day and try to stay warm out there!