Surprise! Mortgage Rates Are Falling Again

After a big rise last year, mortgage rates are on the decline. Find out why.

May 24, 2014 at 9:55AM

Last year, mortgage rates rose substantially, hurting banks JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and other mortgage lenders. But now, they've started falling again. What's happening and why?

In this following video, Dan Caplinger, The Motley Fool's director of investment planning, discusses the latest trends in mortgage rates. Dan notes that the Federal Reserve has been buying mortgage-backed bonds to keep rates down, but this year, the Fed has been reducing its purchases under quantitative easing. Last year, the threat of Fed tapering sent rates soaring, but this year, the expected further increases in mortgage rates hasn't happened. In fact, mortgage rates are down a quarter percentage point. Dan points out that rates are still well above their lows from last year, but he concludes that they're still attractively low compared with historical levels.

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Dan Caplinger owns warrants on JPMorgan Chase and Wells Fargo. The Motley Fool recommends Wells Fargo, owns shares of JPMorgan Chase and Wells Fargo, and has options on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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