Where Are Mortgage Rates Headed?

Clearly, inflation is tame at the moment...but slowly trending higher. The Fed will be watching this data very carefully in the coming months, as they seek to time perfectly the exit from what is essentially a zero rate environment. The Fed will likely err on the side of keeping the Fed Funds Rate lower for longer than they perhaps should, in order to avoid a "double dip" recession...but that will likely lead to more inflation down the road. Remember, Bonds and home loan rates hate inflation - so home loan rates are likely to trend higher as more inflation creeps into the economy.

Speaking of the Fed, they stepped up their Mortgage Backed Security (MBS) buying in the latest week, purchasing $14B in MBS, whereas the most recent prior purchases were around $9.5B. The Fed now has $113B left of their $1.25T allotted commitment, with the buying program set to wrap up on March 31st. The Fed's purchases have helped home loan rates stay historically low - and although there has been some buzz about an extension of the program, it seems unlikely that will come to fruition. When the Fed purchases stop, home loan rates will be very susceptible to moving higher.

The next Federal Reserve Policy Statement will be coming on January 27th, and they have gone out of their way to mention in the last several statements that the MBS buying program will not continue. Listen closely to this Statement, as this will help further gauge what home loan rates have in store.

Please contact Stacee @ slm@staceerealestate.com or 914.806.6981 for help with all your Real Estate needs.

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.(information provided by: Jim Van Slyck Home Mortgage Consultant Thoroughbred Mortgage, LLC An Affiliate of Wells Fargo Home Mortgage contact Jim at jim.vanslyck@thoroughbredmortgage.com.)

Stacee Massoni

slm@staceerealestate.com

www.staceerealestate.com

914.806.6981

Posted via email from Stacee's Real Estate News