Yellen, the Fed’s current vice chair, is suspected to succeed current head Ben Bernanke despite some Republican opposition
. Many in the GOP are frustrated with Bernanke’s “quantitative easing” stimulus project, under which the Fed purchased $85bn in bonds every month for more than a year. Last month the Fed announced it would scale the program back to $75bn per month, with further decreases planned as economic data allows.
The program has been a boon to the mortgage industry, which saw rates fall to near-historic lows as a result of QE. Industry players generally support Yellen’s confirmation, as she is expected to continue most of Bernanke’s easy-money policies.
“I think (Yellen’s confirmation would be) a good thing for the industry,” said Marc Savitt, president of the National Association of Independent Housing Professionals. “She’s kind of middle of the road, and I think she’s a good choice. She proceeds cautiously. I don’t think she’s going to do anything radical that will spook the markets.”
Savitt said he expected a Yellen Fed to continue a slow winding down of QE. However, he said, he didn’t expect the taper to substantially damage the mortgage market.
“It’s going to be a gradual thing and everybody knows about it,” he said. “Interest rates have been artificially low for five years. Everybody knows the interest rates are going to be rising. And how high are they going to go up? Even with the taper, we’re still talking about interest rates that are going to be very low. … If you go back to the mid-80s, we saw interest rates that had gone from 17 or 18 to 8.5 or 8.25, which we thought were great. We’re talking interest rates in the fives now, which will still help a lot of people obtain home ownership.”
The Senate is expected to confirm Janet Yellen today as the next chair of the Federal Reserve. If confirmed in the scheduled late-afternoon vote, Yellen would be the first female chair in the Fed’s history.