This morning, mortgage rates continue to take a hit from yesterday’s comments by Mr. Ben Bernanke before and after the Fed minutes were released.
Prior to the minutes being released, it seemed as though Ben was letting the cat out of the bag by eeking information regarding the economy, QE3 and the continuation of keeping mortgage rates at their artificial lows. Bernanke had stated that bond buying would continue until labor markets improved, which the bond market favored.
The minutes were released revealing mixed views on when the Fed should pull back on buying bonds, like mortgage backed securities:
“Participants also touched on the conditions under which it might be appropriate to change the pace of asset purchases. Most observed that the outlook for the labor market had shown progress since the program was started in September, but many of these participants indicated that continued progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases would become appropriate. A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome. One participant preferred to begin decreasing the rate of purchases immediately, while another participant preferred to add more monetary accommodation at the current meeting and mentioned that the Committee had several other tools it could potentially use to do so. Most participants emphasized that it was important for the Committee to be prepared to adjust the pace of its purchases up or down as needed to align the degree of policy accommodation with changes in the outlook for the labor market and inflation as well as the extent of progress toward the Committee’s economic objectives. Regarding the composition of purchases, one participant expressed the view that, in light of the substantial improvement in the housing market and to avoid further credit allocation across sectors of the economy, the Committee should start to shift any asset purchases away from MBS and toward Treasury securities….
….In their discussion of monetary policy for the period ahead, all but one member judged that a highly accommodative stance of monetary policy was warranted in order to foster a stronger economic recovery in a context of price stability. The Committee agreed to continue purchases of MBS at a pace of $40 billion per month and purchases of longer-term Treasury securities at a pace of $45 billion per month, as well as to maintain the Committee’s reinvestment policies….”
In the Q&A following the release of the FOMC minutes, Ben Bernanke commented that if economic conditions continue to improve, that bond purchases could be tapered by the next Fed meeting in June or July. This caused mortgage rates to trend higher… and today, that trend is continuing.
If you’ve been considering refinancing at a historic low rate, you may want to take action soon! Once the Fed stops manipulating mortgage rates, they’ll be closer to current jumbo/non-conforming rates.
I’m happy to help you with your refinance or purchase on your home located anywhere in Washington state.
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