Fed to stop purchasing MBS

A widely anticipated end to the Fed's purchase of Mortgage Backed Securities is set to end this month. After the last couple of years this should scare everyone, but it doesn't seem to be raising the fear level at all. Recently, PIMCO's Bill Gross said that another 35-50 bps and MBS will be attractive to his firm. That being said you could expect rates to rise another .50% to get Bill's interest. But is this really true? It's all about the spread, and if the rate of a mortgage loan and the cost of funds has a wide enough spread - then buyers for the paper will come. The questions is how much does the spread need to be. In my opinion if you are waiting - DONT WAIT get your mortgage done - PDQ. If you have 6% or higher or have interest only debt of anykind get it wrapped up into amortizing debt stat.