But, according to New York Fed Bank President William Dudley, the Fed is not on “auto pilot” and will restart the MBS purchasing program if mortgage rates spike.  “If there is a sharp turn in the road” Mr Dudley said, the Fed would intervene.

This would potentially stave off what many feared would be a sharp increase in interest rates just as the new Refinance Programs have gotten going.  Normally the two main buyers of Mortgage Backed Securities are China and Wall Street.  For the past year, the US Government has been a major buyer forcing the prices of these debt instruments up and the yeilds (or interest rates) down to record lows.

So, if you are in the market for a new home or a low rate refinance – don’t expect rates to go down any further because of this news; but you may have  a little longer before they rise sharply.  It looks like the party isn’t over just yet.  Stay tuned.