Fed Tapering Begins!

The Fed announced they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years.

This announcement went against the belief of the vast majority of economists who thought the Fed would wait until next year. In this month’s edition of KCM, Bill McBride of Calculated Risk:

“Although the consensus is the Fed will wait until 2014 to start to taper asset purchases, December is still possible.”

The following image helps explain the ramifications of the Fed’s decision on waiting to buy or sell.