The Federal Reserve announced yesterday that they were tapering (reducing) their bond buying from $85 billion a month to $75 billion a month. Meaning $10 billion dollars of possible government and mortgage bond purchase money is officially gone. The more important development is this is an actually step towards complete removal of Fed bond purchases and eventually a Fed rate hike. This could be a fundamental reason for the market to end its 30 year rate drop.
Rates have moved slightly higher since the announcement and are nearing the top of our current range. Any break of 3% on the 10 year treasury would signal higher rates. Currently the 10 year sits at 2.93% much closer to the high end of the range then the 2.5% low end. This announcement makes holding under 3% or breaking over 3% in the next few days very important.
If you are currently in an adjustable rate mortgage or have a rate over 5% now would be a great time to review your situation. Locking yourself into a low fixed rate mortgage could save you hundreds of thousands of dollars. A $400k mortgage locked at 4.5% over 30 years saves $180K over the same mortgage at 6.5%. Call today for your free consultation that provides analysis of your mortgage against your current refinancing options.