Why Mortgage Rates Are Not Higher

Mortgage Rates

Economists have predicted that mortgage rates will rise in 2014, but so far, nothing’s happening. For the past month, mortgage rates have mostly stayed flat or moved lower, with the 30-year fixed-rate mortgage averaging just above 4.5 percent.

Mortgage rates are expected to move higher this year because the Federal Reserve will begin to taper its $85 billion-per-month bond-buying program, which had been helping to keep interest rates low. Mortgage rates started inching up from all-time lows last May when the Fed first hinted that it would do so.                            mortgage rates

“The simple answer is that the rate hike due to the Fed’s tapering really took effect last May/June, despite the fact that the tapering didn’t begin until December,” says Guy Cecala, editor-in-chief of Inside Mortgage Finance. “There was no need to hike rates further.”

For this month, the Fed may cut it’s bond-buying stimulus by $5 billion, but so far, it hasn’t caused mortgage rates to rise.

“Other parties have filled the void, and then some,” Dan Green, publisher of TheMortgageReports.com, told CNBC. “Mortgage bonds are rallying, and mortgage rates are dropping.”

But that doesn’t mean housing analysts aren’t still predicting an uptick in mortgage rates this year. “Mortgage rates will rise because interest rates always increase with an improving economy and a strong stock market, which appears to be the current trajectory, though they likely will rise more slowly than some have predicted,” CNBC reports.

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Source: CNBC 01/29/2014


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