02 Jan Happy New Year~
Mortgage bonds are again at a critical level. Prices have been on a steady decline since mid-November, resulting in an interest rate increase of approximately 1/2 %. If this trend continues, we have at least another ¼% increase that will likely happen quickly. As we have said, we will likely see mortgage rates move higher over 2014, with the pace of the increase dependent upon the Federal Reserve’s speed of tapering QE3. Should they taper too fast, mortgage rates could move significantly higher than the housing market will bear. However, if they move too slow they run the risk of an over-heated economy with inflation pushing higher. The Fed’s new incoming president, Janet Yellen, will certainly have a lot of responsibility based on how she directs Fed policy. Over-all, we are in an upward trending interest rate environment, with days of stability or even improvement. In days where we are stable to showing slight improvement we will suggest floating carefully to hopefully take advantage of small temporary price improvements. Today is such day. However, never get too far from the lock trigger, as things can change quickly.