Photo credit: Jin Lee/Bloomberg/Getty Images
The Federal Reserve committee held a two-day meeting this week, voting as expected to cut their bond-buying program down by another $10 billion per month. Over the past year, the Fed has voted consistently to reduce its bond-buying program, called "quantitative easing," by $10 billion each month as the economy gradually improves and the stimulus program has become less necessary.
By next month, Fed officials are expected to vote to end the program completely, dropping purchases down to $5 billion for the last month. Despite predictions for a big economic rebound year, growth has remained slow and steady, lowering pressure on the Fed to raise interest rates soon.
The key words to watch for hints as to when we can expect rate changes: a "considerable time." This is the phrase Fed officials are sticking to in regard to determining when the time is right to finally raise central interest rates. They maintained the verbiage in their statements this week to keep rates low for a "considerable time" after the QE program comes to an end, indicating the economy is not strong enough to withstand rate changes yet.
What does this mean for mortgage rates? Mortgage rates rose modestly this week to about 4.23 percent on average for a 30-year fixed loan, up about 0.1 percent from a week ago but still significantly lower than where they stood a year ago. For the considerable amount of time to be up, though, depends on how much the meters move on unemployment, household wealth gains, consumer purchasing power, and a variety of other economic factors before major adjustments are made.
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