I wondered what this meant, when Freddie Mac decided to buy out more mortgages due to a change in accounting rules.

Well, it turns out to be good news for home buyers and sellers! The increase in mortgage buy outs by Freddie Mac and Fannie Mae should put some downward pressure on mortgage interest rates, at least for a little while.

Meanwhile, Fannie Mae and Freddie Mac announced on Wednesday that they would begin buying delinquent loans out of pools of mortgage-backed securities owned by investors. Freddie plans to buy up most of some $70 billion in delinquent loans this month, while Fannie, which has a bigger pile of defaulted loans that it has guaranteed, will buy out those loans over the next few months.

That could drive down rates in the short term, say analysts, because investors will sell higher-yield bonds to buy par coupons, which drive mortgage rates. ” Overall, you would anticipate that that would lower interest-rate pressure a little,” says Jim Vogel, an analyst at FTN Financial.

Meanwhile, Fannie and Freddie’s buy-out of delinquent loans will kick lots of cash back to investors over the next few months, and many of those investors may look to put that money back into mortgages. That could help support lower mortgage rates, too.

To be sure, this would be a short-term event, and one that dissipates as the market adjusts to the buy-out activity.

Most analysts expect mortgage rates to rise later this spring, when the Federal Reserve stops buying mortgage-backed securities. Those purchases have helped hold rates at near-record lows for much of the past year.

This change could partially or completely offset the upward pressure on intestest rates due to the ending of the Federal Reserve program of buying mortgage backed securities… at least for a little while.

This makes me think we may really be entering the sweet spot of this real estate cycle, low interest rates AND low prices (in many areas) at the same time.