Mortgage rates take a quick nap
After increasing by more than a percentage point over the summer, mortgage rates are likely to take a break this fall, as long as the Federal Reserve continues to cooperate with borrowers.
“This fall, I would see rates remaining fairly stable,” says Cameron Findlay, chief economist for Discover Home Loans in Orange County, Calif. “I don’t expect them to bounce out of the range of 4.3 (percent) to 4.8 (percent).”
But that could quickly change if the Federal Reserve cuts back on the $85 billion per month bond-purchasing stimulus program that has helped keep rates low for so long, Findlay says.
Mortgage rates spiked in May when the Fed said it planned on reducing the amount of purchases by the end of the year. Investors expected the Fed to trim the program after a September meeting, which would have caused rates to climb. But the Fed stuck with the stimulus program, giving borrowers some extra time.
Eventually, the Fed will slow the pace of purchases and rates will jump. This fall could be the last chance for buyers and refinancers to grab a low rate.