Mortgage rates inched up this week, despite the Fed’s latest efforts to hold rates low. Some experts worry that as investors gain confidence in the economy, rates may keep climbing. Others say there’s still plenty of bad economic news to keep rates at the bottom
The Fed isn’t as optimistic about the economy, and it’s determined to keep rates low.
“While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated,” read the Federal Open Market Committee’s statement on Wednesday. “Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed.”
The Fed says it will keep the key federal funds rate near zero until late 2014. Previously, it had committed to keeping the rate low until mid-2013. While the federal funds rate isn’t directly tied to mortgage rates, it influences their direction.
It also will continue to reinvest in long-term securities and mortgage-backed securities, which is another way to keep rates low.
Will rates rise or remain relatively unchanged this week?
Industry experts and analysts provide their insights.
31% of respondents expect rates to fall in the coming weeks
44% predict a further increase in mortgage rates while the remaining
25% forecast that mortgage rates will remain more or less unchanged