Why Aren't Rates in the 4's?

For those of you who continue to hear about these amazingly low rates, well here is a great summary of why rates have actually been going up and not back down into the 4's (and lower). This is from our friends at Assurity Financial Services.

WHY MORTGAGE RATES AREN'T IN THE 4'S: Further to the idea that congress and others in government are wasting our hard earned taxpayer dollars and not exactly being on the up-and-up with their actions, I brought to light a point a couple of market updates ago that I am told is going to be published in the Wall Street Journal soon (stay tuned). That point was that, even though the Federal Reserve said they were going to step into the markets to purchase mortgage-backed securities, they have done so in a rather surreptitious and insincere fashion. What I mean here is THEY HAVE INTENTIONALLY BOUGHT, AND CONTINUE TO BUY, THE WRONG SECURITIES!!! Go see for yourself!!! You can go to the New York Federal Reserve website, http://www.newyorkfed.org/markets/mbs/archive_2009.html, and see that the vast majority of what they bought over the past few weeks was NOT the 4.00% coupon mortgage-backed securities that contain mortgage note rates generally from 4.25% to 4.875% they all told us they were committed to American's having. Oh, no - they bought a lot of 5.5%'s 5.0%'s, and a few 4.5%'s, all of which are actually backed by - you guessed it - mortgage note rates primarily north of 5%. THAT IS A LARGE PART OF THE REASON THAT WE DO NOT HAVE MORTGAGE RATES WITH A "4" HANDLE. Want to know why they did this? Think about it - you give the market a head-fake like you are going to buy mortgage-backed securities the support mortgage rates of 4.5%. The market then rushes in ahead of you and does the work for you (i.e. EVERYONE ELSE starts to buy those securities). Rates go down as a result of these broader-based market purchases. You actually buy the higher coupon mortgage-backed securities yourself to keep up the charade of making MBS purchases, but the ones YOU are buying actually pay off when the underlying mortgagors refinance due to the lower rate environment created by the other participants you faked-out in the market and YOU get your money back. At the end of the day, you haven't committed to do anything other than try to talk the market down so you could get your money back in a few short months - hardly the long term commitment to use MBS purchases to drive interest rates to 4.5% that we were all sold back in November and December. Wall Street sniffed this one out the minute one hand of the government didn't talk to the other hand and they posted the trade tickets on the New York Federal Reserve Website in the middle of January for all of us to see. Anyone remember exactly when the dead-low in mortgage rates was?!? It wasn't an accident. It is unconscionable that the government could have tried to get away with this and to have deceived the taxpayers and tried to deceive the markets like this - no wonder the markets are in a heightened state of turmoil and mistrust these days!!!