Mortgage Rate Update July 27, 2015

For the most part mortgage note rates are unchanged from Thursday but the accompanying closing costs are slightly less so in fact the rate environment has improved.  We switched to a ‘floating’ position last Monday and since then mortgage rates have improved by roughly .125%.

China’s stock market has taken a sharp turn lower this morning.  The Shanghai index is off nearly 8.5% on concerns that the Chinese government will curb efforts to prop up stock market prices.  To put this drop in perspective the Dow would have to fall by over 1500 points to lose 8.5% of its value.  US stocks are also trading lower which is good for mortgage rates.

Looking at the remainder of the week there are multiple data points that we’ll be monitoring.  Tomorrow S&P will release the Case-Shiller home price index, on Wednesday we’ll get pending home sales from NAR, and a monetary policy statement from the Fed.

The Fed will not be raising short-term interest rates at this meeting but they may change their wording of the statement to provide clarity on when they plan on starting to raise rates.  Believe or not we could actually see mortgage rates improve if the Fed indicates that they will raise rates sooner rather than later.  Why?

When the Fed raises short-term rates it curbs inflationary pressure in the economy.  Long-term interest rates like it when inflation is low.

Current Outlook: floating