Mortgage Rate Update March 3, 2014

Mortgage rates remain at multi-month lows as the financial markets experience a “flight-to-quality” (Click HERE to understand what this term means).

Investors around the world are getting “spooked” by developments in southeastern Ukraine. Russian troops of seized control of various strategic points in the Ukrainian region of Crimea. Will these actions lead to a geopolitical conflict? How might such a conflict impact the European economy which relies on Russian oil? The uncertainty surrounding this issue is leading investors to seek “safe-havens” which is why mortgage rates are benefiting. The Dow Jones Industrial Average is currently off by ~160 points.

In economic news, the Institute for Supply Management’s monthly index of manufacturing activity grew by more than expected in February. In a separate report the Commerce Department released figures that showed personal spending also increasing by more than expected. This is welcome news for the economy which has seen a number of weaker than expected economic reports released over the past month.

Inflation continues to be a non-factor. The Fed’s favorite gauge of inflation, the personal consumption expenditure price index, grew by only 1.1% in the last year. This gives the Fed time to unwind monetary stimulus at their desired pace.

The latest jobs report is due out later this week and there are other significant economic data points scheduled throughout the week. For now, developments in Ukraine will likely overshadow economic data. I will shift to a floating position.

Current Outlook: floating