In his first speech on the economy since the December 11^th Open Market Committee meeting Fed Chairman Bernanke said today, in light of recent changes in the outlook for risk and growth, additional policy easing may be necessary. He went on to say, Based on that evaluation, and consistent without a dual mandate (control inflation and promote economic growth), we stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.

Mr. Bernanke made a point of reminding his audience that, financial and economic conditions can change quickly. Consequently, the Committee must remain exceptionally alert and flexible, prepared to act in a decisive and timely manner and, in particular, to counter any adverse dynamics that might threaten economic or financial stability.

Trading action in the mortgage market ramped up following the conclusion of Mr. Bernanke’s formal remarks — with most investors apparently interpreting his comments to imply that the Open Market Committee will vote to slash their benchmark fed fund rate by 50 basis-points on or before Wednesday, January 30^th.

Over the course of the next few days, mortgage investors will undoubtedly take another look at Mr. Bernanke’s use of the phrase “substantive additional action. Does that phrase mean a couple of back-to-back 50 basis-point fed fund rate cuts will be forthcoming from policymakers — or does it suggest a standard drawn-out process of multiple modest 25 basis-point cuts spread out over the balance of the year?

Quite frankly I’m not sure how to properly interpret Mr. Bernanke’s comments. What I do know is that should the price of the Fannie Mae 5.5% mortgage-backed security close above a price 100.812 the probabilities will favor steady to fractionally lower mortgage interest rates ahead.

Please feel free to contact me if you have questions about your home loan or want to know if now if a good time for you to refinance. I can lend in all 50 states.

302-368-7132 Ext.12

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John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713