With the Fed announcing the end of QE, the next concern is when they will start raising rates.  Mortgage rates are only indirectly tied to any move the Fed might make – which usually means that mortgage rates will start inching up in advance.

Here is a quote from Capital Economics about their expectations:


Unexpectedly, the Fed still thinks it will be a “considerable time” before it begins to raise interest rates. Indeed, the Zero Interest Rate Policy remains in full force, as it has been since inception at the end of 2008.

“We didn’t expect that language to be dropped at this meeting given there is no scheduled press conference, but we wouldn’t be surprised if it is changed at the upcoming December meeting,” Capital Economics said. “Overall, we still believe that the Fed will begin to raise rates sooner than generally expected, with a March 2015 hike the most likely outcome.”

If the Fed adjusts their statement in December, expect mortgage rates to get a jump on any potential rate increase.  Buyers have been cautious for months, and we will probably see a couple more negative readings of the local Case-Shiller Index by next year.

If mortgage rates bump back above 4%, and maybe into the mid-4%s, they won’t kill the 2015 market.  But if you are thinking of selling your house after another 5% to 10% increase in value, you might be in for a long wait.

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