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Fed to Cut Monthly Bond Purchases to $25B

In Market News, Mortgage Rates | on July, 31, 2014 | by | 0 Comments

Whether you are buying or selling a home in the near future, the move by the Federal Government to cut monthly bond purchases will have a dramatic impact on mortgage interest rates…most likely causing them to rise. For Sellers thinking that the average Denver-metro home prices will continue to go up, that theory will be countered with less buyer affordability due to higher interest rates. What does this mean???…if you were holding out to sell for the highest price, you may want to reconsider if you can move now. With higher interest rates, they’ll be less buyers in your price range. For the last few years we’ve adored the low interest rates around 4.25%-4.5%…but things will be quite different when rates are at 5 or 6%.  The Fed’s action to cut monthly bond purchasing will be a major test to see if our economy is as stable as it’s made out to be.  It will be interesting to see how the stock & bond markets react to this already anticipated maneuver over the next few months.  But from what I’ve read, interest rates are expected to rise in 2015.  My two cents.  Click here for article on Fed to Cut Monthly Bond Purchases to $25B  


The Fed and Interest Rates: A Brief Review – from Thomas Kenny
About.com Bonds

“Within the U.S. Federal Reserve, the Federal Open Market Committee (FOMC) – chaired by Janet Yellen – is responsible for determining the country’s interest rate policy. It accomplishes this by setting the target for the federal funds rate, or the interest rate at which banks with balances at the Federal Reserve borrow from each another an overnight basis in order to meet the Fed’s requirements for the amount of cash they need to have on hand. The Fed accomplishes this by managing the total money supply by buying or selling government bonds, which in turn injects money into or out of the financial system. Putting money into the system is designed to bring rates down, while taking money out should bring them up.”  – Thomas Kenny

Here’s a great MarketScape Commentary on the Goldilocks economics, recent labor reports, GDP, unemployment, etc:   Click Here  (from Northern Trust’s Top Investment Advisors)

For more information about the U.S. economy 2nd Quarter GDP Click Here.

Hope this was helpful.  – Patrick Murray, your Denver Realtor.

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