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WARNING To Fence Sitters: Rates Will Climb This Year; Tapering

Despite recent rate-improvements, rates will most definitely climb significantly this year. The reason is that the Fed continues to announce reductions in the amount of mortgage backed securities and treasury bonds it is purchasing.

The Fed is expected to reduce its overall purchases from $85 billion per month in December to zero as soon as October (per commentary we read this morning). The Fed is the dominant buyer of mortgages, by far. When the Fed pulls out of the market, rates will climb. Bottom line: rates will be much higher by October.

We bring this up again b/c we have numerous pre-approved borrowers who tell us that they are in “no hurry” or that they want to buy “within the next year or so.” We warn them that waiting even six months could result in a payment that is several hundred dollars higher every month.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646