The gap between the 10-year Treasury note and the 15-year / 30-year fixed-rate mortgages has narrowed, not surprisingly, since the Federal Reserve began actively buying mortgage securities in January (see Bloomberg article).
The average rate on a 30-year fixed mortgage fell to 4.96 percent in January, the lowest it has been when considering data that goes back to 1971. Rates were recently at 4.98 percent. With a promise to increase mortgage-backed security purchases by an additional $750 billion, along with as much as $300 billion in Treasury purchases over the next 6 months, rates should continue to be under pressure in the near term.
As the Fed continues to support low rates in hopes that consumers will either refinance or make a new home purchase, others are also encouraging consumers to purchase now, but for different reasons. Given the flood of money entering the market, consumers will eventually begin seeing inflationary pressures. Now may be the time to act while both rates and prices are low.