Happy days are here again in the mortgage world. Rates have come back down and things are going great again...just like they were in the spring. Well...not so fast.

It seems we have very short memories and the news cycles can shift so quickly we forget what was going on just a month ago. In October you couldn't watch a new channel and not hear about the Fed 'tapering' the bond purchase program known as QE3. The economic reports were looking better and it seemed like the Federal Reserves policy of purchasing $85B in mortgage bonds every month was going to start to go away in the October Fed meeting. Well...then Congress stepped in and did nothing...seemingly what they are very good at. What I mean by 'nothing' is that they didn't pass a budget and approve a debt ceiling increase so the government shut down just as the Fed was contemplating their decision with QE3.

As the story went the Fed didn't announce they would taper their bond purchases at this point since the government shut down put the economy back on shaky ground (as if it wasn't really on shaky ground to begin with.) So the two or three months mortgage rates rose in anticipation of the QE3 end turned in a moment and rates began to go lower again. Hooray the housing industry cheered. The news turned to other events and the discussion about the Feds (eventual) tapering of the bond purchase plan was quickly forgotten. Well, the Fed may not have made the announcement that they ARE tapering their bond purchase, but the reality is that the Fed IS EVENTUALLY going to taper their bond purchase plan (QE3.)

So why am I talking about it if no one else is? As home buyers and folks who are homeowners with a mortgage sit on the sidelines as rates seem to be moving in a sideways, or better yet lowering, trend line there seems to be little motivation for them to act. Sadly this sense of stability is, like our economy, on very shaky ground. The conversation about the end to QE3 will start up again...maybe in a few weeks...maybe in a few months, but it will come up again. Once the conversation is back in the spot light you will see rates trend higher again. This isn't a possible event...its an eventual event. Rates will move higher as a result of the Fed pulling back on their QE3 bond purchases. The move in rates will happened ahead of the actual date of the tapering...investors will being to unwind their positions ahead of when they think the Fed will start to pull back.

The dates some are expecting for the tapering to being is early 2014...maybe March. That will likely mean investors will begin their moves toward the end of this year and into the early part of 2014. Some buyers and homeowners will be taking their attention from mortgage rates and the housing industry and focusing on the holidays of November and December. Though that is great...I do the same thing...many of those folks may come back in January with a few extra pounds on their waist and a higher rate than they had been expecting on their good faith estimate.

Now I am not advocating you should shelf your holidays and give me a call in 20 minutes to move on a refinance or a purchase, but I would definitely like you to adjust your expectation if you are going to take the next 60 days off so when you come back you aren't more shocked with the rate I may quote than you are the credit card bill you get in January. Rates are great right now...if you are in the market...just know rates are volatile and its always best to lock a rate when its at its lower range when you can control that.

Curious though...what do you think rates will rise to in 2014? or do you think they will stay low next year? If you have an opinion I would love to read your thoughts on it so please back up your forecast if possible.

Have a great week!