Phil Grossfield's Blog

Image Of Freedom.  He changed the world for better on a global scale…how many individuals throughout time have done that? More than being the first black South African to hold office, and more than being the first elected in a fully democratic process, Nelson Mandela’s image now stands for freedom.

If you want to read about him there are plenty of stories on the Internet…about his accomplishments before and after his 27 year sentence, during which he slept on a cell floor. Simply put, his political and philanthropic achievements are worthy of sainthood. I like this 4-minute interview – in his own words….

Pricing Improved – Fed Speakers Today.  The 30-year Fannie Mae Bond is trading higher this morning and fixed pricing is improved by +0.125 on Conforming, High Balance (Agency Jumbo) and Non-Conforming Jumbo products…ARMS are unchanged.

I hate it when the Fed speaks because usually they say something that turns the market against mortgage brokers, that is, their words seem to influence traders to sell off bonds. When bonds are sold off our rates get worse. This morning the St. Louis President said he thinks the Fed should taper now, in December. What?! I hope the traders don’t see this as an opportunity to dump bonds…so far it doesn’t look like it so that’s a good thing. The Fed meets next week to discuss monetary policy. The focus of the discussion will no doubt be when and to what extent they will begin QE tapering. For your information, here is my explanation of QE and QE Tapering:

Quantitative Easing (“QE”) is Fed monetary policy to influence trading in the marketplace. Essentially the Fed buys bonds in mass quantities in order to artificially keep rates low…this has been going on for years now much to our delight in the mortgage business. But the Fed will eventually taper QE, that is, decrease the buying of bonds. Why would they pull back you ask? They will pull back to remove the artificial market and begin to return it to a more natural state, with the intention that eventually they will not have to buy bonds at all and the market will be able to support itself. The Fed will only taper QE if they feel the economy is improved, will continue to improve, and therefore can handle it. The big question isn’t if the Fed will taper, the question is when and to what extent.  For a good portion of 2013 we expected tapering, but one thing after another kept pushing the inevitable back…weak economic reports, the government shut-down, a change in the Fed Chair, etc. But it is going to happen…it’s a long train a coming, and when it gets here your mortgage rates are going to go up, plain and simple.….