Fed Threads The Needle; Inventory Pushing Buyers Toward New Homes; Applications Rise

Fed Threads The Needle; Inventory Pushing Buyers Toward New Homes; Applications Rise

Mortgage rates were surprisingly steady today as the bond market reacted to a new policy announcement from the Fed. Perhaps "reacted" is the wrong word considering the market's response. Specifically, the bond market (which dictates interest rates on mortgages and beyond) was hard to distinguish from most any other random trading day. That's nothing short of impressive given what transpired. So what transpired? That requires a bit of background, but let's make it quick. The Fed is currently buying $120 bln / month in new Treasuries and MBS. These purchases greatly contribute to the low rate environment for mortgages. The Fed has done this, off and on in the past since 2009. 2013 was the first major example of the Fed "tapering" its monthly bond purchases after an extended period of accommodation