Yesterday the Federal Open Market Committee (FOMC) of the Federal Reserve announced a small to moderate change in their policies of buying U.S. Treasury Bonds and Mortgage Backed Securities in January 2014. The Fed's policy of "quantitative easing" (QE) will shrink from $85 billion in additional bond purchases each month, to $75 billion in additional bond purchases each month. Further "tapering" of the Fed's asset purchases is likely to continue throughout 2014, with the hope that the economy gets strong enough to enable the Fed to eliminate all asset purchases later in 2014. At both the current and the future levels, the Fed's policy is doing an effective job of keeping interest rates lower than they would be otherwise.
What can we expect interest rates to do in 2014? Predicting the future is risky business, and only God knows what interest rates will be in 2014. But a wide-range of experts and analysts do a pretty good job of helping us look to the future with wisdom. Their opinions vary, but they are agreed about this: interest rates will continue to increase at a modest pace in 2014.
When interest rates increase, monthly payments increase.Buyers and sellers have a clear opportunity to maximize the value of their resources in early 2014, before rates rise.