QE winds down, and starts right back up (pay attention if you plan on applying for a mortgage soon) (interest rate, approved)

[trickymost]

If anyone's read any of my posts, you'll know I am concerned about what happens to interest rates when the majority of alphabet soup quantitative easing programs begin to phase out in March.

My opinion has always been rates will spike because the demand is not there at the long end of the yield curve which influence mortgage rates.

Bad news is so far (and it's starting to get attention in the main street media) demand once the government factor is removed is weak. This means higher rates should be coming, possibly soon.

Good news, is the government seems hell bent on preventing rates from spiking.
There have been some terrible bond auctions on the shorter end of the curve, resulting in a fresh 200 billion injection into the bond market:

Treasury to expand Supplementary Financing program - MarketWatch

So, if this 200 billion works, then rates *shouldn't* spike for at least a few months.

But, if that is still not enough to supplant demand from indirect bidders (china, japan, etc) then quite literally, interest rates can do a moonshot overnight and never look back.

So, pay attention to what the government is doing, and make sure you aren't caught with your pants down (meaning under contract on a house only to find your mortgage went from 5% fixed when you applied to 7% fixed by the time you're approved).

[chet everett]

You may have heard of "rate locks" -- any one that does not have a provision in their sales contract to have acceptable rate locked by a fixed date prior to closing ought not to be a buyer...