Mortgage Rates Begin To Climb

As expected mortgage rates have begun to climb.  On March 31st, as planned the Fed terminated its mortgage backed securities (MBS) purchase program after buying $1.25trn of the instruments–keeping mortgage rates artificially low.  According to the Mortgage Bankers Association (MBA), the average rate for a 30Y mortgage already climbed to 5.31%  the week ending 4/2, compared to 5.04% a week earlier.  I expect rates will continue to climb peaking somewhere between 5.5% and 6.0%, before leveling off.  This will of course but a strain on any housing recovery.  The chart below highlights the Fed’s net MBS purchases and 30Y mortgage rates: