Mortgage Rates Shrug Off Prospect of Fed Taper

Freddie Mac released its weekly update on national mortgage rates Thursday morning, showing there's been almost no reaction to last week's announcement that the Fed will begin tapering its bond-buying program.

Rates for both 30-year and 15-year fixed-rate mortgages (FRMs) rose only a single basis point each in the week following the Fed's announcement that it will pare back monthly bond purchases by $10 billion. Thirty-year FRMs now stand at 4.48%; 15-year FRMs at 3.52%. A year ago they were at 3.35% and 2.65%, respectively.

Adjustable-rate mortgages (ARMs) reacted differently in the most recent week. Longer-term 5/1 ARMs gained four basis points, rising to precisely 3.00%. Shorter one-year ARMs declined a single b.p. to 2.56%. A year ago, five-year ARMs averaged 2.70% while the 1-year ARM averaged 2.56%.

In the final reporting period of 2013, Freddie Mac Vice President and Chief Economist Frank Nothaft characterized the economic news preceding the most recent rate report as "mixed," with real GDP being revised upward to 4.1% in Q3, but home sales slowing slightly. Existing homes are currently selling at an annualized rate of 4.9 million, while new homes are moving at the rate of about 464,000 per year.

This mix of good news canceling out bad news may help explain why interest rates have not moved much. It does not explain why the prospect of higher interest rates emanating from the Fed isn't pushing up mortgage rates much at all this week.

Mortgage rates peaked this year at 4.6% in August on expectations that the Federal Reserve would reduce its $85 billion-a-month in bond purchases. Those purchases push mortgage and other long-term rates lower and encourage borrowing and spending.

-- Material from The Associated Press was used in this report.

link


Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 30, 2013, at 2:12 PM, StephieW wrote:

    Before buying a timeshare, calculate the total cost of the timeshare, including mortgage payments and expenses, like travel costs, annual maintenance fees and taxes, closing costs, broker commissions, and finance charges. Then compare these costs with the cost of renting similar accommodations with similar amenities in the same location for the same time period. And remember, a timeshare is not an investment for profit or an interest in real estate that will likely appreciate over time. And if you try to resell your timeshare, it is unlikely you will get any way near what you paid for it:

    http://www.timesharescam.com/blog/167-cancel-timeshare-mortg...

Add your comment.

DocumentId: 2776511, ~/Articles/ArticleHandler.aspx, 4/21/2014 11:19:02 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement