The housing recovery began to slow as mortgage rates spiked on Federal Reserve tapering speculation. However, the Fed is sticking to its accommodative measures, which could help lay the second foundation for homebuilder exchange traded funds.
The Federal Reserve pledged to continue its bond purchasing program that helped push down 30-year fixed mortgage rate loans to an all-time low of 3.36%, reports Kathleen M. Howley for Bloomberg.
The 30-year fixed rate is hovering around 4.2% Tuesday.
Joel Naroff, president of Naroff Economic Advisors, believes that rates could move lower through early next year.
“People who were priced out of the market by the jump in rates are getting a do-over,” Naroff said in the article. “Rates aren’t going back down into the low 3s, but we may see the high 3s and we’ll see those rates remain stable through at least February or March. That’s going to restore buyer confidence.”
Last week, the Fed stated that “the recovery in the housing sector slowed” in recent months.
“It’s clear the Fed became concerned about housing over the last month, and that’s why it came out so firmly on the side of bond-buying,” Diane Swonk, chief economist at Mesirow Financial Inc., said in the article. “After months of talking about ending the program, the statement was crystal clear it would continue, open-ended.”