Mortgage Rate Update December 12, 2013
Mortgage rates are priced slightly worse this morning.
For those who were fretting the sequel to the ugly fiscal showdown we had to bare back in October it looks like we’ll all be spared. It appears that Congressional leaders are close to passing a new two-year budget deal that would keep the federal government open without drama.
- House Rep. Ryan and Senator Murray are leading the charge on a new budget deal.
A budget deal removes some uncertainty from the marketplace and if you’ll recall back to September-October uncertainty tends to help keep interest rates low.
In my view, the budget deal also provides further reason for the Fed to announce a tapering plan that would wind down quantitative easing (QE). Back in September the markets had expected the Fed to announce a tapering plan. But the Fed surprised the markets by leaving QE in place which proved vital to softening the impact of the government shutdown in the financial markets. With a budget deal in place that risk is now removed making it more likely the Fed will taper sooner rather than later.
This morning’s monthly retail sales report released by the Commerce Department was better than expected. On a year-over-year basis retail sales were 4.7% higher in November compared to a year earlier.
It appears more and more likely that the Fed will announce a tapering plan at either the next monetary policy meeting, scheduled for Dec. 17th-18th, or at the first meeting of 2014. Regardless, the markets are now expecting this so the impact of the announcement will be baked into interest rates leading up to these dates.
Current Outlook: locking bias