Shared with permission. Article by Francis Phillips

What DID the Federal Reserve Board do on Wednesday?

I found a good recap to share with you that summarizes the Federal Reserve’s decision to END the Government Bond Buy-Back Program next month.

In addition, the Fed stated that they will continue to keep the federal funds rate near zero.  The question is, what will happen to mortgage rates?

I believe that the key factor in play is BONDS.  When the buy-back program ends and there is $85 Billion less in buying action per month, rates on bonds should go up.  And when bond rates go up, mortgage rates go up.  The Fed may vow to keep the fed funds rate down for a while, but if bonds sell off, money will move to the stock market and mortgage rates will rise.

Another consideration:  The Fed’s decision is public knowledge.  The buy-back is ending, giving bond traders another reason to sell.  This also causes rates to go up.

My crystal ball says refinance while rates are still low and grab the silver medal. Gold was awarded last year, silver this year.  Don’t wait for bronze – or no podium at all.

by Francis Phillips

Francis Phillips is the sole author of the content and any opinions expressed in the newsletter are not necessarily those of FCLS, FCB, its owners, officers and employees. This article is meant for informational purposes only, and is not a substitute for financial planning, investment or legal advice.
   
Francis Phillips
Senior Mortgage Loan Originator
NMLS #193642
Direct: (505) 690-7251
francisphillips@qwestoffice.net