Mortgage Rate Update October 29, 2015

Mortgage rates have worsened modestly following the release of the Fed’s monetary policy statement.

As was expected the Fed left short-term rates unchanged but their comments were unfriendly to mortgage rates.  Given the recent turmoil stemming from the Chinese economy many analysts had predicted that the Fed would wait until Q1 2016 to begin their rate hikes.  In fact, prior to the Fed’s announcement the markets had a assigned a ~33% chance for a rate hike in December.  Now the probability is ~50%.

It will be interesting to see what happens from now until the next Fed meeting which is scheduled for mid-December.  By the time the Fed meets we will have received two more monthly jobs reports.  Assuming the November and December job reports are healthy it will become increasingly likely that the Fed will move to hike in December.  If not, then they will be forced to wait.

Speaking of jobs, this week’s jobless claims numbers were relatively strong.  This marks four straight weeks of healthy claims figures which you would think will translate into strong jobs reports.

For now, I will shift to a locking bias as the technical trading patterns do not look favorable for mortgage rates in the near-term.

Current Outlook: locking