Mortgage Rate Update December 18, 2014

Mortgage rates are slightly higher than when we started the week but still within .125% of 2014 lows.  Fortunately we took a locking stance on Monday so existing applications should be protected from this small increase.

In yesterday’s monetary policy statement the Fed removed their reference of leaving short-term interest rates low for a “considerable time” and instead said they planned on being “patient” in raising rates.  This morning commentators are interpreting that statement to mean that the Fed may start raising rates in the next 2-3 meetings which would put us inside four months.

However, with oil prices being at multi-year lows and the potential negative economic impacts associated with that I happen to believe the Fed will not be able to raise rates until the late part of 215 or even into 2016.

The economic calendar has run its course this week so we won’t receive any new data until next week, which of course is holiday shortened.

From a technical perspective it looks like the US 10-year treasury note may bounce lower off the 2.20% level and head back down near 2.00%.  If this happens I’d expect fixed rates to improve by .125%.  However, if stocks continue to rally then the yield may break above 2.20% which would be a bad sign for mortgages.

Current Outlook: floating