“Fed taper” means the Fed will taper off buying bonds which would lead to higher interest rates than otherwise.
Via Barrons blog.
30-yr Fixed Mortgage Rates
In fact, Wall Street has already priced in a Fed taper with a one full point increase in the 30-year mortgage interest rate in the last two months, the biggest jump in 26 years.
Multiple Offers Will Also “Taper”
With higher rates, many home buyers will have to buy less expensive homes further pumping demand for less expensive homes relative to more expensive homes.
- 3.60% 30-year mortgage with $1,000/month payment = $220,000 home
- 4.60% 30-year mortgage with $1,000/month payment = $195,000 home
For home sellers, that means buyers can’t pay you as much for your home.
Or more realistically, that some home buyers can no longer afford your more expensive home so your pool of potential buyers is now smaller.
Multiple offers will “taper” too.