Up And Down Swings In Mortgage Rates This Year
30 year fixed FHA mortgage rates have been as low as 3.25% and 30 year fixed Conventional mortgage rates have been as low as 3.5% earlier this year. FHA mortgage rates have spiked up to the upper 4.0% and conventional mortgage rates have climbed to over 5% just as recently as a few weeks ago. The great news is that both FHA mortgage rates and conventional mortgage rates have been steadily dropping the past several weeks. It is still much higher than it was earlier this year and highly volatile, but at least it is making a correction.
What Is Causing Mortgage Rates Volatility
The reason of the highly volatile mortgage rates in the past several weeks is due to the Feds and their indecisive comments and uncertainty. This has created a highly volatile mortgage backed securities markets. Mortgage backed securities are also known as MBS.
Federal Reserve Chairman Ben Bernanke Comments Has Shaken The Mortgage Markets
Back in May 22, 2013, Federal Reserve Chairman Ben Bernanke told the Joint Economic Committee that he saw great improvement in the United States economy and predicted that the economy will continue to improve and due to the overall improvement in the economy and consumer confidence that his intention was to slow down the pace of purchasing bonds. This statement to the Joint Economic Committee has sky rocketted mortgage rates to the largest single day mortgage rate hike in history. Mortgage rates have sky rocketted to a two year high in a two month period due to the statement by Federal Reserve Chairman Ben Bernanke. Many refinance mortgage loan borrowers who had refinance mortgage loans in the pipeline and did not lock their rates have literally seen their refinance deals evaporate. I know of dozens of mortgage lenders who had hundreds of refinance deals on their pipeline lose all those refinance mortgage files.
Federal Reserve Chairman Ben Bernanke Does A 180 Degree Turnaround And Shakes Up The Mortgage Markets Again
On September 18, 2013, Federal Reserve Chairman Ben Bernanke said that by restricting the financial conditions in recent months, and by continuing to restrict bond buying, that this will cause a slow down in the pace of improving the economy and the labor markets. He said that the Federal Reserve Board will wait to see more evidence before they will restrict in decreasing in purchasing bonds. This news improved mortgage backed securities positively improving it by more than 100 basis points. If mortgage backed securities pricing improves then mortgage rates goes down. With this statement, mortgage rates have plummeted over 0.25%. Current 30 year mortgage rates are at 4.25%, which is down from the recent high but still is higher by 0.75% than it was back in May.
Where Are Mortgage Rates Headed With Unemployment Numbers And The Recent Government Shutdowns
Nobody can predict where mortgage rates are headed. The unemployment numbers seem very inaccurate since so many people gave up looking for work and millions are not reporting their unemployment or are under employed. With the recent federal government shutdown, the uncertainty has been greater than ever before. Federal Reserve Board Chairman Ben Bernanke seems confused at best but seems more like he is totally lost and needs to think things through before he makes statements like he has been doing where it shakes up the whole mortgage markets and affects the economy due to his uncertainty.
Actions Of The Federal Reserve Board
The Federal Reserve Board may still restrict bond purchasing in December but who knows. It all depends on how many jobs are added to the U.S. economy, economic growth, inflation figures, and unemployment numbers.
Mortgage Rates And New Federal Reserve Board Chairwoman Janet Yellen
Federal Reserve Board Chairman Ben Bernanke’s last Fed meeting is expected to be in December because his term expires in January 31, 2014. Federal Vice Chairman Janet Yellen, a democrat, is expected to replace Ben Bernanke. Speculators and analysts are predicting that Federal Reserve Board Chairman Ben Bernanke will be a lame duck Fed Chairman and not make any decision in December and let Janet Yellen have the responsibility to make any changes. We are predicting that the mortgage markets will be extremely volatile from now until then.