Mortgage Rate Update September 18, 2014

Mortgage note rates are mostly unchanged from the beginning of the week but the accompanying closing costs are slightly worse.  Mortgage rates are at the worst levels since the beginning of May.

As is often the case, rates for a 30-year fixed rate mortgage have loosely followed the trajectory on the US 10-year treasury yield as of late.  A look at the chart for the yield on the US 10-year treasury shows it approaching the technical level of 2.65%, up from ~2.35% earlier in the month.  My hope is that rates bounce lower at this threshold.  However, should rates break through this level then I would expect mortgage rates to rise another ~.25% or so.

Speaking of interest rates, the Fed wrapped up a two-day monetary policy meeting yesterday and confirmed what the markets were already thinking.  The Fed will wrap up the last of its $15 billion in quantitative easing at the October meeting and it appears likely that the Fed will begin to raise short-term interest rates sometime in 2015.

The financial markets are keeping an eye on Scotland’s vote for independence which is taking place today.  Polls close shortly.  If Scottish voters vote to become independent there could be a near-term benefit for mortgage rates because of the uncertainty regarding the economic fallout.

For now, we’ll continue to float as long as the US 10-year treasury yield is below 2.65%.

Current Outlook: carefully floating