Despite some weak economic reports, the Fed decided to taper its bond purchase program by an additional $10 billion, noting that economic activity has picked up and the labor market continues to improve. Beginning in February, the Fed will now be purchasing $35 billion in treasuries and $30 billion in mortgage bonds (the type of bonds on which home loan rates are based). These purchases have been designed to stimulate the economy and housing market, and the figure is now down from the $85 billion in bonds and treasuries the Fed had been purchasing last year.
The timing of further tapering by the Fed will impact stocks, bonds and home loan rates throughout the year. It is a key story to monitor as we move further ahead in 2014.
Now remains a great time to consider a home purchase or refinance, as home loan
rates remain attractive compared to historical levels.