Mortgage rates were down this week on the strength of the bond market and expectations that the Fed will not raise rates as high as they have indicated. The 30 Year Fixed Rate Mortgage was at 6.33% and the 15 Year Fixed Rate Mortgage was at 5.52% in Freddie Mac’s Weekly Survey released today. See survey below with its most recent assessment of the mortgage rate landscape.
(dynamic chart with current data)
The Fed recently said it will continue tapering its balance sheet as a major part of its quantitative tightening (QT) plan. The plan is to reduce US Treasury securities held by the Fed by $60 billion per month and mortgages held by the Fed by $35 billion per month. In 2022 they did not stick to the stated Fed tapering plan and have started off 2023 not even close to the targeted mortgage security reductions in the plan. The plan had the balance sheet below $8.4 trillion at the end of 2022 and below $7.3 trillion at the end of 2023. As we approach mid-January, the balance sheet sits over $8.5 trillion. Most significantly mortgages are still not coming off the balance sheet according to plan; yet there has been no adjustment to the plan. This situation is just one of many reasons the Fed lacks credibility in the stock and bond markets and further frustrates its ability to accomplish its price stability goals.
(dynamic charts with current data)