San Diego Mortgage Rate Update – The Taper Begins

San Diego Mortgage Rates
The Taper Begins

The announcement that all mortgage brokers, realtors, and potential buyers have been fretting, occurred late last week.  The Fed announced that it will begin tapering its Bond purchase program by $10 billion per month.  And even though everyone was expecting it to happen at some point, it was a surprise that it happened in December of 2013 instead of 2014.

If you have been reading my posts, you are aware that the Fed has been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and housing market. After the taper announcement, the Fed will now purchase $40 billion in Treasuries and $35 billion in Mortgage Bonds.

The Fed’s decision caught the markets off guard and caused Bonds and San Diego mortgage rates to worsen on the news. In his speech, outgoing Fed Chairman Ben Bernanke stated that the tapering process will continue to be based on economic data. The decisions that the Fed makes about future tapering will continue to have a big impact on Mortgage Bonds and interest rates heading in 2014.

There was other important news announced last week as well.  The final reading on third quarter Gross Domestic Product rose to 4.1 percent. This was above expectations and was also the highest level since the fourth quarter of 2011.  This is a good sign for our economy.

Housing Starts in November soared by 22.7 percent from October to 1.09 million units annually. This was the largest percentage increase since January 1990 and the highest rate of increase in five years. Existing Home Sales fell year-over-year in the month ended in November for the first time in 29 months.

Overall, the housing market continues to be on solid ground and this likely contributed to the Fed’s decision to begin tapering its Bond purchases.

How does this affect San Diego Mortgage Rates?

San Diego Mortgage Rates did increase by about a half point after the Taper news, but have since remained flat.

Now remains a great time to consider a home purchase or refinance as rates for San Diego home loans still are attractive and the new QM (Qualified Mortgage) guidelines start on January 10th. If you are interested in getting a San Diego Mortgage Rate quote, please click HERE or feel free to give me a call at 619-312-0612.

I just quoted a 30 year fixed at 4.625% for a rate and term refinance at 80% loan to value. The loan amount was $350,000 and the payment was $1,804.  I was able to give an $850 closing cost credit at this rate as well.

What Could Affect Mortgage Rates This Week? 

The holiday-shortened week will see few economic reports.

  • On Monday, Personal Income and Spending will be released along with the inflation-reading Personal Consumption Expenditure data. Consumer Sentiment will also be reported.
  • On Tuesday, Durable Goods Orders and New Home Sales will be delivered.
  • As usual, Thursday brings Weekly Initial Jobless Claims and comes after last week’s big spike in claims to 379,000, which was the highest level since March.

The Bond markets will close early on Tuesday, Christmas Eve, at 2:00 p.m. ET, with Stock markets closing at 1:00 p.m. ET. All markets will be closed on Wednesday in observance of Christmas.

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