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QE3 could last until 2014

Posted on Monday, January 21, 2013 at 2:32:06 PM

In an effort to hold mortgage rates near current levels, the Federal Reserve announced to implementation of QE3 at the end of last year.

Although the economic recovery is supposed to take hold in the coming months, the Federal Reserve could continue to purchase bonds and mortgage-backed securities well into 2014, according to a report from Goldman Sachs.

"Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative," the Fed said shortly after announcing QE3.

Because these markets are so closely tied to the mortgage industry, this action could hold rates near current levels for quite a while. In addition, the Fed said it hopes to continue this initiative until the national unemployment rate falls below 6.5 percent. Although there a number of job market gains during the course of 2012, the rate remained stagnant at 7.8 percent at the end of 2012.

Based on the agency's criteria, fixed mortgage rates could remain below 4 percent in 2013. Most recently, during the week ending January 17, the average rate for 30-year FRMs hit 3.38 percent, down from 3.4 percent, according to Freddie Mac.