Recent Move by the Fed Impacts the Market and Home Loan Rates

"Listen to what the man said." The title of Paul McCartney's hit song also applied to Fed Chairman Ben Bernanke last week, as the Fed made an important decision that impacted the markets and home loan rates. Read on for details.

Recently, the Fed unexpectedly delayed tapering of its Bond purchase program (known as Quantitative Easing) as Bernanke said that the economy still isn't strong enough to begin easing back its purchases. Remember that the goal of these purchases has been to stimulate the economy and housing market. In his press conference, Bernanke said that tapering could come towards the end of the year, but for now the Fed will continue to purchase $45 billion per month in Treasuries and $40 billion in Mortgage Bonds.

After the news, Stocks had a record trading day while Mortgage Bonds had their biggest one-day rally since August 2011. This is significant because home loan rates are tied to Mortgage Bonds, so the Fed announcement helped home loan rates as well.

In other news, the Consumer Price Index for August came in below expectations and was lower than the July reading, showing that inflation at the consumer level still remains tame. The year-over-year CPI reading fell to 1.5 percent, led lower by a decline in energy prices, and remains below the Fed's upper target range of 2 percent.

In housing news, Housing Starts rose by 0.9 percent from July to August while Building Permits fell by 3.8 percent. However, there was a big surge in permits for single-family dwellings, pointing towards a sustained strengthening in the housing recovery. Existing Home Sales also came in above expectations, reaching an annual rate of 5.48 million units in August, a six-year high.

What does this mean for Lake of the Ozarks home loan rates? Economic data in the coming weeks and months will be a key factor in whether the Fed begins tapering its Bond purchases later in the year or in 2014. This timing could pay a big role in the direction Bonds and home loan rates move in the months ahead.

The bottom line is that now remains a great time to consider buying a Lake of the Ozarks Home or refinance, as home loan rates remain attractive compared to historical levels. Let me know if I can answer any questions at all for you or your clients.

We would love the opportunity to help you manage your Lake of the Ozarks Mortgage Loan or refinance.  Give me a call at (573) 746-7211 or send me an email at mlasson@fsbfinancial.com with any questions you may have!!

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Michael Lasson

Sr. Residential Mortgage Lender

2265 Bagnell Dam Blvd, Suite B

PO Box 1449

Lake Ozark, MO 65049

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(573) 693-9141

Email:  mlasson@fsbfinancial.com

NMLS #: 493712