Mortgage Rate Update December 16, 2013

Mortgage rates are priced slightly better to start the week compared to last Thursday.

It’s only fitting that as we enter into the last full business week of 2014 the main topic is the Fed and quantitative easing (QE).  Throughout the entire year mortgage rates have fluctuated up and down based on market sentiment regarding when and how the Fed will act.

For a quick history lesson the Fed originally employed QE back in 2008 as a way to curb the economic impact of the housing and financial crash.  In November 2012 the Fed announced the third iteration of QE often dubbed “operation twist”.  Since then interest rates have played a game of tug of war cycling up and down based on expectations for the Fed to end the program.

BIG BEN WIL OVERSEE HIS LAST MONETARY POLICY MEETING AS FED CHAIRMAN, WONDER IF HE'S EXCITED TO MOVE ON?
BIG BEN WILL OVERSEE HIS LAST MONETARY POLICY MEETING AS FED CHAIRMAN, WONDER IF HE’S EXCITED TO MOVE ON?

This week, Ben Bernanke will oversee his last monetary policy meeting and analysts are again at odds as to whether or not the Fed will announce a plan to wind down QE.  The post meeting statement is scheduled for Wednesday.  If the Fed does announce a plan and it is aggressive it would likely pressure rates higher.  If the Fed does not indicate any end to QE then I’d expect the opposite reaction.

There is a significant amount of data on the economic calendar this week but clearly this is the most important date on the calendar.  I don’t believe the Fed will taper at this meeting.  I believe Bernanke will let his predecessor (Janet Yellen) make that choice and I also believe they’d be well served to wait and see the January employment report.

Current Outlook: floating

The views and opinions expressed in this site are those of the author(s) and do not necessarily reflect the official policy or position of Cherry Creek Mortgage Co., Inc. This is for informational purposes only. This is not a commitment to lend.