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Instant Reaction: Lawrence Yun on Today’s FOMC Statement

The following is NAR Chief Economist Lawrence Yun’s thoughts on today’s announcement by the Federal Reserve to start unwinding their balance sheet in October, and what that will mean for mortgage rates through 2018:

“As the Federal Reserve indicated today, the huge purchases of mortgage-backed securities and U.S. government bonds could not have continued and will unwind beginning next month. Looking within the statement, the pace of selling looks to be in slow motion. That means that mortgage rates would rise up only modestly over time. Given the pace of unwinding asset purchases with the fewer rounds of anticipated short-term rate hikes over the next two years, it’s expected that mortgage rates should still remain at historically attractive levels. The 30-year fixed rate may rise to slightly above 4% by the end of this year, and may only reach 4.7% by the end of 2018.”