"Operation Twist" - The Federal Reserve's Move To Lower Long Term Interest Rates

The Federal Reserve is doing what they can to keep interest rates, including mortgage rates, low, encourage bank to lend, and hopefully get the economy moving again. Their latest action has been termed "Operation Twist." The plan in a nutshell is to sell medium term bonds and buy additional longer term bonds, including the 10 year Treasuries. The increased demand should lower the 10 Year Treasury rate, and along with it the mortgage rates that are tied to it. (Adjustable rate mortgages are generally tied to pricing affected by the bonds the Fed is selling, so we will likely see ARM rates increase as fixed rate mortgage pricing drops.)