It only took one day after I wrote the last blog–wondering what will happen to mortgage rates when the FED quits buying in June, that the FED surprised everyone on wall street.

Some called it —  FED GONE WILD !  They spent another 1.15 TRILLION.

Speaking of 1.15 trillion, “To provide greater support to mortgage lending and housing markets, the (FOMC) decided to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.15 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion.  Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.  The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets.”

The 10 yr Bond dropped .5% in minutes—the largest drop since 1987. Mortgage rates for a 30 yr fixed dropped to 4.5 to 4.625% range, so this may be the last chance to refinance IF you have at least 20% equity and a job.

Finally, a bailout for the common guy!

We will worry about double digit inflation some other day.