Mortgage Rate Update December 13, 2012

Mortgage rates are more or less unchanged from the beginning of the week.

Yesterday’s Fed comments brought one expected and one unexpected twist.  As expected, the Fed committed to continuing the purchase of longer-duration US Treasury securities even after “Operation Twist” expires at the end of the year.  The ongoing monetary stimulus is intended to help keep long-term interest rates, like mortgages,low.

What was unexpected was that the Fed announced it would tie short-term interest rates to specific targets for unemployment and inflation.  According to their comments they will not raise short-term interest rates until the unemployment rate hits 6.5% (currently 7.7%)  and/ or inflation rises above 2.5% (currently ~2.0%).  The Fed’s specific targets will place additional weight on the monthly jobs and inflation reports.

European debt crisis?  Still going, still lots of talk.

Fiscal Cliff?  Still there, still lots of talk.

Current Outlook: floating