Mortgage Rate Update Janaury 20, 2015

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Mortgage rates worsened by ~.125% on Friday.  So far today mortgage-backed bond prices have stabilized.

As I’ve been writing on this forum interest rates are currently benefitting from lower oil prices (lower inflationary pressure) and weakness in Europe.

Oil prices continue to slide.  After the International Monetary Fund cuts its forecast for global growth on Monday oil prices have fallen another 4% in trading today.

The European Central Bank (ECB) is scheduled to meet this Thursday and the markets are expecting them to announce a program for “quantitative easing” with the goal of stimulating their economy.  Given that the markets are already expecting this the announcement won’t influence interest rates unless it is more extensive or less extensive than is expected.  If the ECB is more aggressive than analysts believe it will be then mortgage rates in the US should benefit and vice versa.

THURSDAY'S EUROPEAN CENTRAL BANK ANNOUNCEMENT WILL BE THE KEY DRIVER OF INTEREST RATES THIS WEEK.
THURSDAY’S EUROPEAN CENTRAL BANK ANNOUNCEMENT WILL BE THE KEY DRIVER OF INTEREST RATES THIS WEEK.

For borrowers who don’t want to gamble on this announcement it would make sense to lock in no later than Wednesday because by the time the financial markets open in the US on Thursday the announcement will already have been made.

Current Outlook: neutral

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