Mortgage rates move up as Fed ends its bond purchase program

Mortgage rate trends: 

Mortgage rates have been rising significantly this first week of October.  The economic news is just outstanding with the lowest in 49 years and wages increasing.  Fear over the impact of trade re-negotiations has reduced, and a flow of money from the safety of bonds to stocks is also making an impact.

Behind the scenes the Fed has finished its “stealth” quantitative easing.  Last October the Fed began reducing their 50 billion balance sheet by 10 billion a quarter in mortgage bond purchases.  The graphs actually show with each reduction in the Fed’s balance sheet, mortgage rates making the move up. This is the real reason about why rates are rising now. We no longer have artificial support keeping rates lower than they otherwise would be.  Rates will continue to be volatile for the next few weeks as we find the “new normal.”

 

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