Mortgage Rate Update August 7, 2013

Quick housekeeping note: ‘Rate Update’ will be on vacation all next week so the next update you will receive will be Monday, August 19th.  

Our shift to a floating position on Monday has paid off with some rates improving modestly and buying ourselves a couple extra days on lock windows even if rates are unchanged.

Stocks around the globe are trading lower today (Japan down ~4%, London down ~1%, US down ~.5%) following comments by Chicago Federal Reserve President Charles Evans.  Evans confirmed what this blog has been forecasting for weeks.  He said that he would not rule out the Fed announcing its tapering plans at the September 18th meeting.

 A winding down of the Fed’s quantitative easing (QE) policy will likely put downward pressure on stocks as well as bonds.  When stocks suffer it often helps mortgage rates.

The remainder of this week’s economic calendar is light with an auction of US 10-year treasury notes later today and weekly jobless claims tomorrow being the only significant events.  Next week’s calendar is much more significant and as we approach the end of August there are fewer traders in the office which can generate more volatility.

The longer-term outlook for rates is unchanged.  I still believe rates will increase from this level at some point from now until the end of the year.  Therefore, I will shift to a locking bias since ‘rate update’ will be on vacation next week.

Current Outlook: locking