Recently, Fed Chair Powell signaled the central bank could begin to taper or reduce the daily purchases of Mortgage Backed and Treasury securities sooner rather than later at the December 15th Federal Open Market Committee meeting. Tapering was supposed to begin around June of next year so, it could come earlier than expected. Also, Mr. Powell said that now is a good time to retire the word “transitory” for inflation given that the risk of higher inflation has increased.
The recent Consumer Price Index for October saw an annual increase of 6.2%, its sharpest increase in 31 years. Whether the cause for higher inflation came from a jump in gasoline prices, rents, housing, food, or the supply chain problems, the uptick in prices across the board could be with us longer than anticipated. The Fed feels that inflation will move back down over the course of next year, but also said that it will remain high through the middle of 2022 … we shall see.
So, what does this mean for potential home buyers or those who are looking to refinance their current home loans? Well, with mortgage rates still low, now may be the time to lock in these low rates. With higher inflation and tapering coming, it seems like the path of least resistance for mortgage rates is to move higher.
We still don’t think long-term rates, like mortgages, will soar, simply because we can’t afford it as a country – the debt service is too much for the U.S. Treasury to handle.
Bottom line: Jobs buy homes, not inflation or tapering. If you are secure in your current employment or think you can easily leave your job and secure another, then now is always the time to jump into the pool of homeownership.
Source: Mortgage Market Guide
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
