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Equity Now In The News - 2013


[image]Rebekah Coleman  |  Thursday, September 19, 2013 12:50pm

Fed Plan to Continue Bond Program Causes Rate Decline



The Federal Reserve’s decision to continue making bond purchases and not begin their proposed tapering plan impacted mortgage interest rates heavily this week.

Rate reports provided by loans.org show that all three interest rates decreased at least 20 basis points for the week ending Sept. 19, 2013. The 30-year fixed-rate mortgage averaged 4.24 percent, a significant drop from 4.47 percent reported last week.

The 15-year FRM averaged 3.26 percent. This mortgage interest rate is down from 3.45 percent set last week.

The final interest rate reported, the 5/1 adjustable-rate mortgage, also declined this week. It transitioned from last week’s average of 3.17 percent to this week’s average of 2.97 percent.

Three housing experts agreed that two separate Fed events made the greatest mark on mortgage interest rates.

The first event was Lawrence Summers’ decision to withdraw his consideration for the Fed Chairman position, which would have replaced Ben Bernanke. The second, and largest factor, was the Fed’s decision to retain their bond purchasing program.

The interest rate market was also impacted quickly due to the Fed’s decision to continue their bond purchase program. In a 
released statement, the Fed Committee said it would “await more evidence that progress will be sustained before adjusting the pace of its purchases.”

Within hours of the 2 p.m. EST announcement, the Dow Jones jumped markedly, ending the day up 147 points.

Throughout the summer, mortgage interest rates have shifted each week. Experts believed that at some point — a point that most thought would be at yesterday’s committee meeting — a schedule would be set for the purchase reduction. The fact that none was given was a surprise for Matt Hackett, underwriting and operations manager for Equity Now.

Hackett said the Summers decision made a temporary impact on rates, but after the Fed’s statement, the mortgage interest rates went down and stayed down. This is because of the overarching impact that the Fed has on the economy as a whole.

“So much on the market is dependent on the Fed, so it is a big deal,” he said.

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