Mortgage rates. Where are they and what are they getting ready to do? Last December 31, 2013 the 30 year fixed mortgage rate was at 4.69 percent. That’s the highest it has been over a 3 month period. Right now the mortgage rate for a 30 year fixed is hovering around 4.5 percent. A year ago it was a full percentage point lower than that.
But what does the future hold? On January 28-29 the Federal Open Market Committee (FOMC) will hold one of eight scheduled annual meetings. The FOMC, “reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth”. They can determine how much debt the federal government can buy up as part of the last round of quantitative easing.
The Treasury Department has been spending upwards to $85 billion a month. This buy has kept interest rates down. Any easing or threat of easing of this buy causes mortgage interest rates to rise. Last December they reduced the payment from $85 billion to $75 billion. The end result was the highest mortgage rates for that time period.
“If the Fed announces another round of cuts to its bond-purchasing program after the two-day meeting ends on Wednesday, rates could jump immediately, says Derek Egeberg, with Academy Mortgage in Yuma, Ariz,” according to Bankrate.com
This comes at an interesting time when the Mortgage Bankers Association (MBA) readjusted its 2014 lending forecast downward on January 14, 2014.
“Despite an economic outlook of steady growth and a recovering job market, mortgage applications have been decreasing – likely due to a combination of rising rates and regulatory implementation, specifically the new Qualified Mortgage Rule,” reports MBA. They are expecting a 5 percent drop in purchase originations.
Now the question is if mortgage rates do go up, by how much and how quickly? If the Feds figure on fiddling with the $85 billion a month buy then rates are expected to climb into the 5’s by around June.
Margaret Hitchcock is a Realtor and owner/operator of Hitchcock Realty in Morehead City along the Crystal Coast of North Carolina. Whether it is a home or condo, on the beach or mainland be sure to contact Margaret today. Visit her online at www.HitchcockRealty.net or call (252) 269-2893.