Print edition: 
The Federal Reserve is ending a program this month that has kept interest rates low and housing affordability levels high for months.
But several Wichita analysts said they think the Fed's move will have little, if any, impact on a local market moving into the key spring selling season.
On March 31, the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae and Freddie Mac, returning control of interest rates to private investors.
In late summer and fall 2009, lured by fixed 30-year mortgage rates under 5 percent and the first $8,000 tax credit, which expired Nov. 30, first-timers pushed sales of previously owned homes to the highest levels in at least three years, reducing record inventories and braking price declines.
That tax credit was renewed Nov. 5 and expanded to buyers who had not purchased a property in five years, although the credit for repeat buyers is $6,500.
The second credit expires April 30, is unlikely to be renewed and remains the engine moving buyers.
"Not a single one has expressed concern about interest rates," said Cheryl Miller of Long & Foster Real Estate in Blue Bell, Pa., acknowledging that "there is, I suppose, a false sense of security regarding rates remaining low."
But as the date for the Fed pullout approaches, analysts generally agree that an immediate rate spike is no longer the likely result.
"We think there will be a significant increase in private demand (for mortgage-backed securities) to take the place of the Fed," said David Berson, chief economist at PMI Group in Walnut Creek, Calif. Not enough to offset the Fed's departure, he said, with rates possibly increasing a quarter of a percentage point, "but a significant one."
In Wichita, many analysts think the Fed's departure is temporary and will force mortgage rates no higher than 6 percent.
"I am not convinced that we will see the 1 percent rate increase that is being predicted," said Tessa Hultz, CEO of the Wichita Area Association of Realtors.
"With the well-publicized deadline approaching, I would have expected to see some changes already if there would be a marketwide reaction to the Fed's MBS program coming to an end."
Dan Jones, who heads Capitol Federal's lending operations, agreed.
"We won't see any catastrophic adjustments," Jones said. "Most of the mortgage experts believe there might have been a 1 percent or so discount in the market over the last year, anyway.
"When you chase people out of the market is with a 2 percent adjustment, and even rates at 7 are historically a low interest rate."
But John McKenzie, president of Coldwell Banker Plaza Real Estate, expects the local market to slow somewhat.
"It will definitely have an effect on the amount of funds available for borrowers with credit scores under 650," McKenzie said.
"Let's face it. If you look at FHA loans, those go to people with decent, but not pristine credit. That's where we'll see the biggest push."
Bankrate.com columnist Holden Lewis said rates are so low now — averaging 4.87 percent this week for a 30-year fixed mortgage — that an increase "is inevitable. But maybe they'll rise gradually instead of jumping" April 1.
The Fed says it will stop buying by March 31 instead of at the end of the month, meaning that it likely has reduced its purchases and rates haven't risen, Lewis said.
Moody's Economy.com chief economist Mark Zandi said rates will drift higher in summer and fall, with the half a percentage point the Fed's action cut working its way back in — mainly because investors believe the government would return if they got too high.
For that reason, Philadelphia mortgage broker Fred Glick said, rates won't change.
"If the old buyers don't come back, the Fed will intercede again to ensure rates during a continued slowly recovering economy will not go so high as to stymie a positive direction," Glick said.
