Mortgage rates were up again this past week in the Freddie Mac Weekly Survey and as mentioned last week are now at levels last seen 14 years ago. The 30 Year Fixed Rate Mortgage was at 6.29% in the Freddie Mac survey results and the 15 Year Fixed Rate Mortgage was at 5.44%.
The Fed Funds Rate target rate also went up by another 0.75% today. The Fed was expected this month to start reducing the amount of mortgage and treasury securities on its balance sheet by $95 billion every month, which they refer to as tapering or QT (quantitative tightening.) Just like its weak approach throughout the summer tapering, the Fed is off to a very unimpressive and tepid start. In fact, mortgages held by the Fed have gone up this month and total assets have only been reduced by $10 billion in the first three weeks of the month (See charts below.)
Fed Chair Powell reiterated yesterday they still plan to follow through with QT, but the words continue to not match the actions. With respect to mortgage bond reductions of $35 billion per month, Powell indicated they won’t sell any but instead let them roll-off the balance sheet as mortgage loans are paid-off. After 4 months of this approach, they have gone in the wrong direction and mortgage holdings are up by $7 billion. So there is no QT there and very little on the horizon for the mortgage portfolio.
Mortgage rates are likely to remain volatile in this uncertain environment as the Fed tries to navigate this last part of the year and regain some credibility. It remains difficult to predict what may happen to rates if or when the Fed starts to taper according to its actual plan.
(dynamic charts with current data)
Freddie Mac’s Weekly Survey was released this morning with its most recent assessment of the mortgage rate landscape. See the details of their survey below.
(dynamic chart with current data)