Mortgage Rate Update January 29, 2015

Mortgage rates have improved very modestly this week.

In yesterday’s Fed statement that was released following their regularly scheduled monetary policy meeting they signaled that they would not hike short-term interest rates sooner than mid-year.  They also did not commit to hiking rates at that time.

As we’ve pointed out on this blog the Fed is in a difficult position.  Although the US economy is chugging along at a healthy pace inflation remains low and international weakness poses a threat to our continued growth.  I do not believe the Fed will be able to raise short-term rates until Q1 2016 but we’ll have to wait and see just like Fed officials are.

Mortgage rates are back down the best levels of the year.  Could they continue to trend lower?  Absolutely but I don’t think it’s a bad time to lock in because I would not be surprised to see rates tick higher before they tick lower.

From a technical perspective mortgage-backed bonds are trading up against technical resistance so I will shift to a near-term locking bias.

Current Outlook: locking