The Federal Reserve is holding off on taper (Bond-Buying Activity). For the past several years, the Fed has been buying approximately $85 billion in bonds per month. This strategy has kept interest rates low and attractive to would be home buyers and borrowers. Most industry professionals (including this economist/real estate broker) expected that strategy to stop or at least a reduction. U.S. and global bond markets have been highly reactive to the Fed’s taper talk.
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In true Federal Reserve fashion, they continue to defy the masses and kept the markets guessing:
Citing rising mortgage rates and an unstable economy, the Federal Reserve said that it’s holding off on its decision to pull back on its bond-buying activity.
“Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth,” the Fed said in a statement.
Rates on 30-year fixed-rate mortgages averaged 4.5 percent with an average point of 0.7 for the week ending Sept. 19, down from 4.57 percent last week but up from 3.49 percent a year ago, according to Freddie Mac’s latest Primary Mortgage Market Survey.
Rates on 15-year fixed-rate mortgages, five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans and one-year Treasury-indexed ARMs also fell.
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