Last week, CoreLogic reported that home prices across the U.S. rose by nearly 12 percent from June 2012 to June 2013. By comparison, home prices only rose 3.76 percent from June 2011 to June 2012. In addition, research and analytics firm Clear Capital said that prices rose 9.3 percent in the year ending in July.
While housing markets have turned the corner, this pace of growth may be unsustainable. With home loan rates rising over the past several months, this rate of appreciation could slow.
Weekly Initial Jobless Claims rose by 5,000 in the latest week to 333,000, below the 340,000 expected. This followed the Jobs Report for July, somewhat disappointing with less jobs created than expected.
What does this mean for home loan rates? When will the Fed start tapering its bond purchases? The Fed has been buying $85 billion of bonds a month to help stimulate the economy and housing market. This includes mortgage bonds, to which home loan rates are tied, and these purchases have helped home loan rates remain attractive.
The Fed has said the rate of its purchases will continue to depend on economic data and could be increased or decreased accordingly. Last week, several Fed members spoke out in favor of tapering these purchases as early as the Fed’s meeting in mid-September. However, with our economy growing at sub 2 percent, economic data between now and September will be a key factor in this decision.
Home loan rates remain attractive compared to historical levels and now remains a great time to consider a home purchase or refinance.