Will the Fed Fend Off a Mortgage Rate Rise

When it comes to the economy and the Federal Reserve, do you believe economic abstractions or job creators? This has been a hard-to-read recovery, leading the central bank to err on the side of doing more rather than less. The Federal Reserve has held its ground on maintaining its stimulus program. They have recently announced that it will continue purchasing $85 billion in bonds each month — at least for now. The Fed’s bond-purchasing program has helped move mortgage rates to their lowest levels on record in recent months. However, the Fed has signaled that the program would likely come to an end soon, causing a shift upward in mortgage rates. “We have seen recent up tick in mortgage rates — which almost certainly is due to market expectations of tapering in the near future and may have influenced the Fed in not changing its guidance,” Econoday analysts said. The economy added 200,000 new jobs last month, 20,000 of which were construction jobs due to an upswing in housing. The job growth could point to less need for the bond-purchasing program. Federal Reserve chairman Ben Bernanke has made recent comments that a slowdown in bond-buying could begin some time this year.