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Interest Rates Move Higher After Fed Announcement

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30 year conventional rates higher by 13 basis points

The Fed appears to be in turmoil with a divergence of views on what to do in order to head off a potentially catastrophic financial disaster. Janis Yellen may be wondering why she wanted this job and she might be wondering that for the foreseeable future.

One thing is for sure, there is some obvious tension between Fed board members on what is the right course of action moving forward. Do they reduce their rein on interest rates and allow for some higher unemployment; one member says no as he argues these low interest rates could be "stoking financial instability". Other members want the Fed to keep buying our debt to keep rates down until unemployment reaches a "healthy" 5.5%.

What we do know is on Wednesday they announced that they would further reduce their monthly debt purchases. This is the 3rd reduction since the first of the year and now lowers their monthly purchases a total of 30 billion to 55 billion each month. This news sent the markets into turmoil but Wall Street quickly recovered. Bonds didn't and the average overnight rate on a 30 year conventional mortgage sits at 4.42% up from 4.29% a week ago. These are now the highest rates we have seen since January 19th. Always interesting, always fun.

Fins up........

Tom Priester
Principal Broker

Paradise Sharks Real Estate
Direct Line 561 308-0175



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