By Narbik Karamian

The Federal Reserve has raised speculation that it would consider a less-accommodative monetary policy this year and the U.S. central bank could raise rates and begin selling assets (until now the Fed has been mostly buying U.S. treasuries) later this year to try to curb inflation. This will translate into an increase in mortgage rates. We are slowly observing a gradual increase in mortgage interest rates and higher costs for government loans.

This shift in perspective comes as more U.S. economic growth is noticed through strong earnings and a drop in the unemployment rate to 8.8% (the lowest since March 2009). It seems that the middle east crisis and the increase in oil prices are having a less impact on the U.S. economy than it would have if it happened a year ago. (it actually helps by attracting investments from the middle east to the U.S. for being a safer place for investing)

Another interesting topic is that the government is brainstorming ways to possibly eliminate Fannie Mae and Freddie Mac which have received about $150 billion in federal aid. Despite their losses, Fannie Mae and Freddie Mac have been the driving force in the mortgage lending industry after the real estate crisis towards the end of 2007. They have continued to issue home loans while all banks froze their lending operations as well as purchase most of the non-performing loans from the large banks to relieve the banks from their toxic loans and allow further liquidity.

The government is encouraging the private sector to get more involved in the mortgage lending side so it can gradually minimize the involvement of Fannie Mae and Freddie Mac in lending.

As we have continued to see historically low interest rates until now, it is becoming apparent that this trend will soon reverse itself as the federal government shifts its focus on inflationary concerns and as the end of QE-2 approaches in June 2011 (there is rumor that the Federal Reserve may end the program a little sooner).

Please feel free to contact me with any questions.

Narbik Karamian is with BeneGroup, Inc., A Premier Mortgage Brokerage and Real Estate Consulting Firm. You can contact him at: Cell: (408) 315-2834 or visit his website at :