Mortgage Rate Update December 19, 2013

Mortgage rates are worse this morning.

Yesterday, at Ben Bernanke’s last monetary policy statement as Fed Chairman, the Fed announced that they would taper quantitative easing (QE) by $10 billion in January.  Many in the marketplace, including yours truly, did not expect this announcement at this meeting.  The Fed did not commit to a complete wind down of QE instead stating that further tapering will be data dependent.  This means we could continue to see volatility as market sentiment swings on how quickly the fed will wind down QE.

Coincidentally, mortgage rates held steady immediately following the announcement.  It wasn’t until this morning that rate sheets took a turn for the worse.

From a technical standpoint the US 10-year treasury note, which mortgage rates loosely follow, has been on a steady climb higher since the beginning of November.  It looks like the yield on the 10-year will climb to 3.00% in the coming days.  The question is where do we go from here?

Although I believe mortgage rates are likely to trend higher as the Fed tapers I believe we have some room for improvement in the near-term.  I will recommend floating over the next couple days to see if we see pricing improve from these levels.

Current Outlook: near-term floating