The Week in Review:
Happy New Year! Home mortgage interest rates moved higher at the end of last week when the minutes of the Fed’s last meeting was released. The minutes revealed that most members of the Fed felt the mortgage-bond buying program (quantitative easing) would likely end in 2013. Rates moved up about .125% on the news..
What to Expect:
It will be an interesting year. In addition to U.S. economic conditions, Europe’s debt crisis and resolutions on spending cut and debt ceiling issues will play a role this year. We avoided the fiscal cliff but Congress still has plenty of work to do.
The Fed has indicated they will keep short-term rates low so expect the Prime Rate to remain unchanged. However, expect upward pressure on long-term rates such as home mortgage interest rates in 2013. The Mortgage Bankers Association forecasts the 30 year fixed rate to be 4.40% at the end of 2013. The Fed’s participation is a big factor. If they do end quantitative easing this year, rates could be higher.
A quick note about the housing market: increasing builder optimism, low rates, low inventory and pent-up demand from the past several years have 2013 looking like one of the best years since 2007. The housing market is ramping up. Those in need of a housing change would be wise to act this year.
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