Archives for November 2013

Will a taper in early 2014 cause mortgage rates to rise?

With the government shut down and somewhat weak economic data the Fed delayed the “taper” in September 2013 (even though the market was prepared for it).  Mortgage rates eventually declined but are they going to start rising with a possible taper in January or February 2014?  Uncertainty is never a good thing for markets, especially for bond investors.  However very few investors (at this point) believe the Fed will taper in early 2014 since the government faces another shut down and employment (along with inflation) remain weak at best.

California mortgage rates during early November 2013

Late October 2013 until the 1st of November mortgage rates declined to their lowest levels since June 2013.  After some fairly decent economic reports rates have started to rise again.  Considering the rapid decline in bond yields it’s not surprising to see a bounce higher.  Mortgage rates will probably remain under pressure over the next several weeks if the data continues to be somewhat positive.  California, and other states, are seeing slightly higher 30 year fixed rates and 15 year fixed rates are coming under pressure.  Adjustable rate mortgages in California seem to be holding well as LIBOR remains very low.

Mortgage rates and Janet Yellen

With Larry Summers stepping aside the President nominated Janet Yellen to be the next chairwoman of the Federal Reserve.  Janet Yellen is a well known economist who supports loose monetary policy.  Some fear she may expand the current buying program and risk further long term damage to the economy.  Mortgage rates will find a “friend” in Janet Yellen as she generally supports the idea of low mortgage rates to stimulate economic expansion.  After her nomination mortgage rates trended lower as investors believe she will have a positive affect on mortgage rates.