As Tapering Continues, Mortgage Rates Anticipated to Rise

We recently talked about the Fed tapering their stimulus package in 2014, and how mortgage rates were anticipated to rise in response.  The trend is expected to continue in full force.

Here are the current mortgage rate projections from KCM blog:

Janet Yellen, the replacement for Ben Bernanke as Fed Chair, made it quite clear in her testimony for the Financial Services Committee recently, that she will continue to taper bond purchases at the currently established level.

“In December, the Committee judged that the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions warranted a modest reduction in the pace of purchases, from $45 billion to $40 billion per month of longer-term Treasury securities and from $40 billion to $35 billion per month of agency mortgage-backed securities. At its January meeting, the Committee decided to make additional reductions of the same magnitude. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings."

What does this mean for buyers?

As we anticipated at the original announcement of this news, the earlier that buyers can make the move in 2014 the better off they will be.  We can now confirm the Fed has no intention of slowing the rate of tapering, and this will effectively raise mortgage interest rates as the year continues.  For some buyers, this could make all the difference in the ultimate affordability of their ideal home.

If you're thinking of starting your home search or are wondering what these statistics mean for you, don't hesitate to send us an email or give us a call.  We'll be happy to help.

 

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