Mortgage Rate Update Janaury 14, 2013

Mortgage rates are mostly unchanged this week.

With Congress back in session this week I expect the financial markets to returns its focus on the debt ceiling debate.

Democrats currently complain that we need to raise taxes while Republicans believe that spending is our main problem.  If the financial markets believe there is a legitimate chance that Congress will fail to raise the debt ceiling in time it will help mortgage rates remain low and possibly even move lower.  However, if lawmakers can reach a credible compromise then it would likely pressure rates higher.

The bulk of the economic calendar for this week will come Tuesday-Thursday with significant reports on inflation, housing, and manufacturing activity.  Most analysts believe the economy is improving and if the upcoming results support this view it would place further pressure on rates to move higher.

Fed Chairman Ben Bernanke is set to speak this afternoon.  A couple other Fed officials have recently stated in public that the Fed is discussing when and how to wind down monetary stimulus.  Rates will certainly move higher in anticipation of those moves.

I can see where rates may move modestly lower over the course of the next few weeks if fears about a US default mount.  However, in the long-run locking seems like the prudent play.

Current Outlook: locking bias