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HSH.com: Yellen's QE Comments Force Rates Up to 4.46 Percent

NationalMortgageProfessional.com
Mar 26, 2014

Rates for the most popular types of mortgages increased a bit according to HSH.com's Weekly Mortgage Rates Radar. The average rate for conforming 30-year fixed-rate mortgages rose by five basis points (0.05 percent) to 4.46 percent. Conforming 5/1 Hybrid ARM rates increased seven basis points (0.07 percent), closing the Wednesday-to-Tuesday wraparound weekly survey at an average of 3.18 percent. "Fed Chair Janet Yellen made a splash in the press conference which accompanied last week's Federal Reserve policy meeting," said Keith Gumbinger, vice president of HSH.com. "Her characterization of how quickly the Fed might begin to raise interest rates once the QE tapering is completed was surprisingly clear, and seemed to be sooner than markets were expecting." The Federal Reserve is gradually slowing purchases of Mortgage-Backed Securities (MBS) and Treasury bonds and is expected to end the Quantitative Easing (QE) program by about October of this year. Coupled with an upward change in where Fed members expect the federal funds rate to end in 2015, Ms. Yellen's characterization of how long "a considerable time after the asset purchase program ends" would last ("...around six months or that type of thing", she replied) seemed to suggest that the first change in short-term rates since 2008 would come sometime next spring. As markets expected both a somewhat later start and a slower rate of increase, some repositioning of investor holdings took place, lifting interest rates. "While not a spike like we saw last spring, the small bump in rates was sufficient to put us back to levels seen in late January," added Gumbinger. "However, we are still at very favorable levels as we begin the traditional spring home buying season, even if the Fed and an expected warming in the economy may conspire to nudge them higher in the weeks ahead." Average mortgage rates and points for conforming residential mortgages for the week ending March 25, according to HSH.com: Conforming 30-year fixed-rate mortgage ►Average rate: 4.46 percent ►Average points: 0.15 Conforming 5/1-year adjustable-rate mortgage ►Average rate: 3.18 percent ►Average points: 0.08 Average mortgage rates and points for conforming residential mortgages for the previous week ending March 18 were, according to HSH.com: Conforming 30-year fixed-rate mortgage ►Average rate: 4.41 percent ►Average points: 0.19 Conforming 5/1-year adjustable-rate mortgage ►Average rate: 3.11 percent ►Average points: 0.13
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