What Does Quantitative Easing's End Mean for Real Estate Prices?
The US Federal Reserve declared this week that its quantitative easing (QE) program of purchasing mortgage-backed securities and US government bonds, which it started in 2008 in an effort to boost the economy by lowering long-term interest rates, would come to an end. propertyfinder The news did not come as a shock. The Fed has been signaling this for over a year, in fact taking the Band-Aid off gradually. The market's immediate reaction was measured, with the 10-year U.S. Treasury yield rising just slightly in the previous week—less than 10 basis points (bps) as of midday on October 30, 2014. The end of quantitative easing is a significant move forward in the recovery from the Great Recession. While the medium-term consequences are difficult to forecast at this time, popular wisdom suggests that interest rates will rise in 2015. Several factors, in our opinion, reduce the risk of a significant increase in interest rates in the medium term. The most significant fact...