The long awaited FED meeting has arrived and now those of us in the mortgage and real estate business can take a deep sigh of relief. Contrary to popular belief, the Fed’s announced that they WOULD NOT begin tapering their purchases of bonds. The Fed stated that they wanted to “await more evidence that progress will be sustained”.
berOver the last 4 months the market has wrestled with the anticipation that the Federal Reserve would “Taper” their purchase of mortgage backed securities. When the FED’s talk about “tapering” they are essentially stating that they plan to reduce and eventually eliminate the current purchase of mortgage backed securities. It was those policies that led to record low interest rates for borrowers that sparked one of the largest refinance booms in history and still a prevailing force in the housing recovery. Over the last 4 months, mortgage rates have increased steadily with no real tangible reasons as to why, other than speculation.
“Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy,” the committee wrote. “However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
After the Fed’s statement today mortgage rates decreased substantially and the overall consensus is that there may be even more gains to realize.
So what does this mean for you, the consumer? If you are currently a homeowner who didn’t take advantage of a refinance into a lower rate, this may be a great opportunity to lock in some savings. If you are a buyer in today’s market this may be a great time for you to make that push and get your offers accepted. Locking in a rate that is approximately .25% lower could lead to tens of thousands in savings over the life of your loan.