Mortgage Rate Update December 20, 2012

Mortgage note rates remain very close to all-time lows which were established this year but closing costs have increased over the past week.

According to White house staffers talks between Republican John Boehner and President Obama have “deteriorated” making it unlikely a budget agreement will get worked out before we fall off the fiscal cliff in the new year.  If you’ve read this blog over the past month you know this is not surprising.  In January I predict lawmakers will sign a new budget deal which will restore some of the Bush-era tax cuts and then proclaim they “lowered taxes”.  Brutal.

You may hear news reports of a budget deal passing the House of Representatives today.  This is a largely symbolic tactic on the part of Republicans.  Their bill will not make it out of the Senate.

How is all this impacting mortgage rates?  Pricing on rates have worsened since the beginning of the month on optimism about negotiations.  Now that talks are deteriorated they’ve yet to rebound significantly.  They very well could but the financial markets are expecting a solution in January so I doubt they’ll go too much lower.

For the year mortgage rates have had a great run.  Average 30-year fixed rate mortgages declined by about .50% and remained below 4.00% for the entire year.

Current Outlook: neutral