Earlier this month the Federal Reserve announced its third round of quantitative easing (QE3) purchases of mortgage-backed security bonds. The economists at Goldman Sachs are predicting that the QE3 program could last until mid-2015 and that it could eventually reach $2 trillion.

Goldman is also expecting that the Federal Reserve will not raise the federal funds rate until 2016. The federal funds rate is used as a benchmark for both consumer and business loans and has been at almost 0% since December 2008. In the last statement released from the Federal Reserve, it was stated that they expected the rates to remain low until the middle of 2015.

In the $2 trillion estimate, Goldman also includes the cost of purchasing long-term treasuries under an extension referred to as "Operation Twist". This program includes selling short-term treasuries to fund the long-term purchases.

Goldman is also guessing that the Federal Reserve will rate to improve the nation's unemployment rate, so that it is in the 7-7.5% range before it ends the QE3 bind purchases. They are even further predicting that interest rates will not rise until the unemployment rate in the 6.5-7% range. Unemployment was at 8.1% in August, which was down by 0.2% from July. However, the recent decrease in the unemployment rate was a direct result of job seekers dropping out of the labor force all together as opposed to an increase in hiring.

The Federal Reserve is predicting that the unemployment rate will be at approximately 6.7-7.3% by 2014. If the unemployment rate is in fact in that range by 2014, the Fed could end the QE3 purchases in mid-2014. In mid-2014 the bond purchases will have reached $1.2 trillion. However, Goldman's estimate recalls for a longer recovery in the job force and economy. If the economy does not improve as predicted, other steps are possible such as speeding up asset purchases.

However, it is always difficult to predict events so far in the future and it is even more difficult with the upcoming presidential election. The Feral Reserve's Chairman Ben Bernanke's term will come to an end in January 2014. In addition, Mitt Romney (Republican presidential candidate) has stated he will have Bernanke replaces if elected. Many republicans we very disapproving when the QE3 was publically announced.

If Goldman is correct in their estimate, this QE will be larger than each of the preceding rounds. The 2009 QE1 purchases totaled $1.7 trillion and the 2010 QE2 purchases totaled $600 billion.

Even though Goldman is predicting the low interest rates to last through at least mid-2014, the market is always unpredictable. We would advise you to take with a professional today and see was rate you can lock in to lower your monthly mortgage payments. You can always refinance again in the future is rates remain low, however you do not want to lose out on record low rates while they last.