Today, the Senate Banking Committee approved Janet Yellen’s nomination as the new chairman of the Federal Reserve. The vote was 14 in favor and 8 against. With the overall support of a Democratic majority in the Senate, and the support of key Republicans on the Senate Banking Committee, it appears that Yellen will be leading the Fed come Jan. 31st. If Yellen is confirmed as anticipated, she will be the first woman ever to head the Federal Reserve.
Many expect for Yellen to continue Fed’s policy of quantitative easing for the time being. Over the past several years, the Fed has been vigorously buying Treasury and mortgage-backed securities in an effort to increase the supply of money available for loans and thus push down long term interest rates. In the coming year, however, if bond (particularly MBS) purchases decrease, as many experts claim Yellen has hinted at, interest rates will rise. This could mean a further increase in mortgage interest rates in the coming year.
Current mortgage interest rates are still excellent. FHA and VA APR is in the high 3% to low 4% range, and APR on portfolio loans in the mid 4% to mid 5% range. With the anticipation of increasing interest rates in 2014, those in the market to buy a home may want to purchase sooner rather than later.
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