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"Taper Tantrum" — rates spike as Bernanke hints at QE tapering
3.98%
Annual avg rate
30-yr fixed
+0.32pp
vs 2012
Year-over-year
0.11%
Fed funds rate
Annual avg
+1.46%
CPI inflation
Year-over-year
Estimated monthly rates based on annual averages and adjacent-year interpolation. Seasonal pattern reflects typical mortgage market spring/summer premium.
Fed Chairman Bernanke's May 2013 congressional testimony hinting at QE tapering triggered a sharp bond sell-off (the "Taper Tantrum"). The 10-year Treasury yield surged from 1.6% to 3.0%, pulling mortgage rates up 130 bps before stabilizing.
CPI fell to 1.5% — below the Fed's 2% target. The low inflation paradox: despite QE and near-zero rates, inflation remained subdued, largely due to weak wage growth and global deflationary pressures.
Mortgage rates jumped from 3.3% in January to 4.5% in September before settling near 4.0% by year end. The rate spike slowed refinancing dramatically. Purchase activity continued recovering but at a slower pace.
$1,429/mo
At 2013 rate (3.98%)
Principal + interest only
$1,964/mo
At current rate (6.84%)
Principal + interest only
$535/mo
2013 was cheaper
vs today on same loan