Lenders released some of the best mortgage rates that had been sent out in more than five months on Wednesday. As the prices for mortgage backed securities (MBS) increased, rates continued to fall. While it was not expected for the Federal Reserve to make any changes in monetary policy, including tapering, experts expected a different tone than they received from the policy makers.
The Federal Reserve even changed around wording that could be making reference to the recent tight financial conditions. Mortgage backed securities and all other bond markets have shown rapid signs of weakening after the announcement, while many lenders revised rate sheets to fall more in line with the rates of the previous day.
Overall, rates ended back where they started and the conforming, 30-year best-execution fixed rate remains set at 4.125%. In the meantime, rates are not expected to fluctuate much for the next few weeks. The housing industry has shown signs of improvement, with an increased number of refinancing applications and an increased number of new purchase applications on the table during the last week.
Here are some of today’s rates from the larger, more popular lenders:
Wells Fargo – The 30-year fixed rate conforming loan sets at 4.250% while an FHA backed 30-year fixed rate loan sets at 4.00%. The 15-year fixed rate conforming loan sets at 3.375%. A 5-year ARM rounds out the group at 2.875%.
Citibank – The 30-year fixed rate conforming loan varies from 4.125% to 4.250% while a 15-year fixed rate conforming loan ranges from 3.375% to 3.500%.
US Bank – For a 30-year fixed rate conforming loan, the rate varies from 4.00% to 4.25% while an FHA backed 30-year loan ranges from 3.750% to 3.875%. A 15-year fixed rate conforming loan varies from 3.125% to 3.375%. Rounding out the group is the 5-year ARM from 2.625% to 2.750%.
Bank of America – The 30-year fixed rate mortgage sets at 4.125% while a 15-year fixed rate loan is at 3.375%. A 5-year ARM is at 3.25%.
Rates had climbed higher after the fear that the Federal Reserve would begin tapering the stimulus in September. When Federal Reserve Chairman Ben Bernanke announced that the economy was too tepid and that tapering would not yet start, rates fell again.
After the government shutdown in early October, experts knew tapering would not yet get underway because the economy was not yet stable after hundreds of thousands of workers being furloughed. The theory became that the Federal Reserve would wait to see what kind of an impact that the shutdown had on the economy before deciding to taper. However, although tapering did not begin, the Federal Reserve seemed to shy away from any mention of the economic situation and the government shutdown.
Many believe that the tapering will not begin until sometime next year. Since September 2012, the central bank has purchased $85 billion in bonds each month to keep the economic growing. The bonds are designed to keep interest rates low, increase jobs and put money back into the economy. In the meantime, the mortgage rates remain at historic lows. Now is the time to lock in low rates before they fluctuate more.