Mortgage Interest Rate Update 08.21.2013

The Fed released their minutes today and no real big news.  The taper might be on….or it might not.  Fed remains “data” dependent and at this point refuses to lay out a clear plan for tapering.  The bond market continues to sell off on the lack of a clear plan and thus mortgage rates continue to rise.  Many bond investors remain on the sideline since it’s difficult to determine what the Fed will do.  Mortgage rates might continue to rise if the Fed does not lay out a clear plan in September.  The August employment report might help put a cap on that rise if the data point is soft and comes in below expectations.  Mortgage rates have pushed up since May/June and many believe are heading to 5.50% -6.00% by year end.  Others believe mortgage rates are peaking and will stay in the 4.50% -5.00% rage for a while.  Very few believe mortgage rates will return to sub 4%.  However the case can be made that the 30 plus year trend in rates was down prior to Fed intervention and thus once the Fed leaves the bond market it could resume its move down especially with a slowing economy.