Friday, December 13, 2013

Fed May Taper Soom

Mortgage Time
Mortgage Market News for the week ending December 13, 2013


Fed May Taper Soon
Stronger than expected economic data and progress on a budget deal in Congress caused investors to move forward their expected timing for the Fed to begin to scale back its bond purchases. This hurt both stocks and bonds, and mortgage rates ended the week a little higher.
Fed officials have revealed several conditions which will help them determine when to reduce their bond purchases. Recent economic events and comments from Fed officials suggest that those conditions may have been met. The performance of the economy may be sufficient to make Fed officials comfortable reducing the level of monetary stimulus. A broad range of recent economic reports revealed gains in the labor market, GDP growth, Retail Sales, and manufacturing. In addition, Congress moved closer this week to reaching a two-year budget deal. The proposed deal would reduce the level of uncertainty about fiscal policy, which is another concern of Fed officials. As a result, investors expect the Fed to announce in the near future that it will begin to taper its bond purchases, and some think that it may take place as soon as next Wednesday's Fed meeting.
Congressman Mel Watt was confirmed this week as Director of the FHFA. The FHFA is the conservator over Fannie Mae and Freddie Mac and as such has tremendous influence over much of the mortgage market. Director Watt takes over from Acting Director Edward DeMarco whose last act was to raise the fee Fannie Mae and Freddie Mac charge borrowers to guarantee loans. Unless reversed by Watt, the fee increase will be effective beginning early next year and will result in an increase in most mortgage rates of about 0.10%.

Davis Orebaugh
Mortgage Consultant
NMLS #:   / NC 323545
OnQ Logo large.jpgNMLS # 5645
2501 Blue Ridge Road, Suite 370
Raleigh, NC 27607
Phone:  919.926.7554 Cell:  919.740.7049 Direct Fax:  919.590.1767