30-Year Conventional - Slightly Lower
Jumbo - Relatively Unchanged
FHA & VA Programs - Slightly Lower
Like most, we thought there would be tapering because it was so telegraphed by many different sources, etc – but when you consider the weak economic numbers of late and inflation non-existent…it really is not a surprise to see the Fed continue underwriting the economic recovery.
Stocks also had an enormous trading day, leaving the Dow (15,676) and the S&P 500 (1,725) at record high closing levels.
In his press conference, Mr. Bernanke said that tapering could come towards the end of the year, but for now, the Fed will continue to purchase $45B per month in Treasuries and $40B in Mortgage Bonds. The Fed will also maintain its existing policy of reinvesting principal payments from its holdings of agency debt and agency Mortgage-Backed Securities in agency Mortgage-Backed Securities and of rolling over maturing Treasury securities at auction.
“Tapering could come towards the end of the year”- This important comment is keeping rates from dropping back to the low levels we saw earlier in the year. As long as the potential for the fed to stop buying exist, we will not see a large decrease in rates.
Here are some of the Fed's projections:
-Growth between 2% and 2.3% this year, down from 2.3% to 2.6%.
-Unemployment to fall to between 6.4% and 6.8% in 2014, between 5.9% and 6.2% in 2015 and between 5.4% and 5.9% in 2016.
-Inflation for this year should fall between 1.2% and 1.3%, more than the forecast in June of 0.8% to 1.2% and the Fed doesn't see it getting back to 2% until next year.