Mortgage Rate Update August 17, 2015

Mortgage rates are slightly better as compared to last Thursday.

Following last weeks announcement from the Chinese government that they would allow the Yuan to float more freely against the US dollar mortgage rates have improved by .125%-.25%.  The goal of the policy is to make Chinese goods & services more competitive in the global economy and spur economic growth.  Some analysts think the Yuan could decline by another 6%-10% which would surely hurt US based corporations.  It could also force the Fed to hold off on rate hikes.

Speaking of the Fed, we are exactly one month away from their next monetary policy statement.  The markets are currently assigning a 45% probability that they will raise short-term rates at the next meeting.  As I have written previously, if the Fed does raise short-term interest rates sooner rather than later it may actually help long-term interest rates (including mortgages) improve.

The economic calendar is fairly busy this week.  Earlier today the New York Federal Reserve Bank released its monthly report on manufacturing activity in that region.  It showed slower than expected activity and has the financial markets worried about a slowdown in the months ahead.  Bad news for the economy is often good news for mortgage rates.

The highlights for the rest of the week are housing starts (tomorrow), consumer price index (Wednesday), Fed meeting minutes (Wednesday), and existing home sales (Thursday).

Current Outlook: floating