Mortgage Rate Update February 19, 2015

Mortgage rates are unchanged from the beginning of the week.

Yesterday the minutes from the most recent Fed meeting were released.  As I have previously written about here on ‘rate update’ the minutes indicated that the Fed is concerned about raising short-term interest rates too soon and will likely have to delay monetary tightening.  Prior to the release many believed the Fed would begin to tighten in mid-2015 but given that inflation remains low and the US economy faces headwinds in the form of low oil prices (which will likely impact future job growth) we thought the Fed would have to wait until early 2016.

Greek officials continue to negotiate with the European Union over a bailout extension.  Time is running out for Greece but the financial markets still believe a last minute deal will be reached.  It is very possible a deal is reached in the next few days which could influence mortgage rates although until the details are known it is difficult to know how.

Is the US stock market overvalued?  The S&P 500 is up almost 5% since the beginning of February and up almost 140% since the 2009 lows.  Many market analysts are beginning to call a correction.  If stocks do retreat in the coming weeks/ months that would typically bode well for mortgage rates as investors would likely reinvest their capital in the bond market.

The technical picture looks favorable for interest rates so I will recommend floating for now.

Current Outlook: floating