Fed Announces Tapering to begin in Jan

By
Mortgage and Lending with Finance Of America NMLS #311662

Heading into Wednesday's highly anticipated Fed meeting, investors were divided about what the Fed statement would reveal. The Fed announced that it will begin to scale back its bond purchase program. The stock market rallied after the news, but mortgage rates rose modestly and ended the week a little higher.

The Fed announced that it will begin to scale back its bond purchases from $85 billion per month to $75 billion. Treasury and MBS purchases each will be reduced by $5 billion per month. Fed officials expect to continue reducing the pace of bond purchases at future meetings depending on the performance of the economy. According to the statement, Fed officials anticipate that the fed funds rate will not be raised until the Unemployment Rate declines "well past" the 6.5% level. The statement also noted some concern that inflation has remained below the Fed's objective of 2.0%, giving them reason to remain highly accommodative. The Fed's decision reflects increased confidence that the economic recovery is sustainable. If unemployment gets worse after the holiday the new chairman could ramp up again.

The housing data released this week revealed that the pace of improvement slowed a bit toward the end of the year, but also provided reasons to be optimistic heading into next year. November Existing Home Sales declined a little from October, and the total inventory of existing homes available for sale also dropped. According to the National Association of Realtors, there is a "pent-up demand" for housing, but tight supply conditions have constrained home purchases. Addressing this issue, home builders are ramping up their pace of construction. November Housing Starts surged 23% from October to the highest level since February 2008. Housing Starts were 30% higher than one year ago. Building Permits also increased in November. The December NAHB Home Builders confidence index jumped to the highest level since August. 

Posted by

Matt Brady

 

Builder Sales Manager, NMLS ID#311662

(858)342-8659 cell |844-268-1952fax

 

Skyline logo

 

mbrady@skylinehomeloans.com| mattbrady.skylinehomeloans.com    
1455 Frazee Road., Suite 705| San Diego, CA 92108

 

    

 

 

 

BIA SanDiego 15 year Member and P2 Sponsor

 

 

 

BIA SMCBoard Member since 2012

 

 

 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Mortgage / Finance
Location:
California
Tags:
money
mortgage rates
tapering

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
1,928,687
Ronald DiLalla
Century 21 Discovery DRE 01813824 - Anaheim, CA
No. Orange Cty Real Estate

A sign of higher interest rates...The Fed's back off on bonds

Dec 20, 2013 03:30 AM #1
Rainmaker
409,131
Matt Brady
Finance Of America - Del Mar, CA
Lending With Competence And Character

Honestly, I would rather have lower unemployment and higher rates, but if we do not get this economy going this will certainly hurt. Higher rates combined with the new QM mortgage rules will make it tougher for all of us in the housing community.

Dec 20, 2013 03:35 AM #2
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
409,131

Matt Brady

Lending With Competence And Character
Let me earn your business!
*
*
*
*
Spam prevention