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Fed tapering begins, interest rates increase slightly

Posted on Friday, December 20, 2013 at 9:36:03 AM

The long-awaited announcement from the Federal Reserve is finally here - tapering has begun.

In order to bolster the economy, the central bank has been buying $85 billion in government-backed securities each month, according to The Washington Post. Now, that figure will decrease by $10 billion per month, a sign that the Fed has an increased confidence in the U.S. economy. 

This means that there could be less fiscal risk at the moment, the media outlet reported. There isn't as much of a need for the central bank's policies, because other aspects - like the unemployment rate - have improved. 

However, there was some concern that the announcement could send some financial elements out of whack, like the U.S. stock market and residential financing rates. At the moment, that doesn't appear to be the case.

Freddie Mac' Primary Mortgage Market Survey indicated that mortgage rates ticked up slightly for the week ending Dec. 19. The 30-year fixed-rate mortgage averaged 4.47 percent, compared to last week's 4.42 percent. The 15-year FRM averaged 3.51 percent, up from 3.43 percent.

Frank Nothaft, vice president and chief economist for Freddie Mac, said in a statement that the Fed announcement did play a part.

Overall, residential financing and other aspects haven't shifted drastically as a result. There is plenty of optimism for the economy, and a lot to look forward to in 2014.