Treasury Could Help Mortgage Market

\r\nThe return on mortgage investments, whether in property or in yields, took a tumble in response to lagging home sales and lower home values. But the Treasury is trying to work in response to stabilized rates issued by the Federal Reserve over the past few weeks in the hopes that it will spur buying of government bonds by mortgage investors. As yields have dropped, so have mortgage rates, fueling a rekindling of refinances on the mortgage frontier.\r\n

The result of all this rate swapping is that many investors are changing their investments to fixed rate payments, hedging losses before they are realized. Though the investors themselves may loose some money, the interest in the Treasury and Fed could raise mortgage business and perhaps stave off a flagging economy. Though the increase in mortgage activity is encouraging, the 10-year note would have to drop from its present 4.80 to 4.50, sparking a large refinance boom as was seen in the summer of 2003.\r\n