Mortgage Update 1-24-2014
Much like Justin Bieber, mortgages rates are at a crossroads. Will they go up or down? Their behavior can be decidedly random. Rates edged conservatively higher at the beginning of this week but retorted quickly lower as the week progressed, matching or beating the best levels seen so far in 2014. If you took a mug shot, um…snapshot, of rates in the last few weeks, you would see they are still in a lower range than most of December and early January. This comfortable range will likely be interrupted by the Federal Open Market Committee announcement next Wednesday. The FOMC holds eight regularly scheduled meetings throughout the year. The central bank has pledged to continue buying bonds until the labor market has “improved substantially,” trimming purchases in $10 billion increments over the next six meetings before announcing an end to its quantitative easing program no later than December.
Any announcement typically causes rates to jump higher or lower. The Fed will have to decide to either continue on the path to reduce its bond buying program or to slow down and hold off tapering until their next meeting in March, based on the exceptionally weak employment data released on January 10th. Likely, the FOMC will decide to continue on its path to taper as it meets for the last time before Janet Yellen takes over as head of the U.S. central bank from Ben Bernanke. It’s not uncommon for rates to slide in one direction even before an event, so it’s best if the decision to lock or float before Wednesday happens now.
In other news, U.S. home sales rose slightly in December, the first increase after three monthly drops in a row. The National Association of Realtors said on Thursday that sales of previously owned homes rose 1%, from 4.82 to 4.87 million units, from November to December. Total sales for 2013 were the strongest in seven years.
Besides the FOMC announcement, next week brings us President Barack Obama’s fifth State of the Union, the 56th Grammy Awards, and the consumer confidence, durable goods and pending home sales reports. Looking forward to seeing what the week brings us!
Charlottesville Real Estate Experts
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