Mortgage Rate Update January 26, 2012

Mortgage rates are priced better morning.  Before I get into commentary one housekeeping note: ‘Mortgage Rate Update’ will be on vacation tomorrow and returning on Monday.

Yesterday’s monetary policy statement + forecast has helped mortgage rates improve.

Following their 2-day open market committee meeting Fed officials announced that they expect short-term interest rates to remain low through 2014.  The markets had been expected confirmation of low rates through the end of 2013 or mid-2014.  the fact that the Fed announced a longer time frame leads investors to believe that the recovery may be slower than expected which helps long-term rates remain low.

In terms of economic data, the Commerce Department released a report showing that durable goods orders rose by 3.0% in December which was higher than expected.  In a separate report the Labor Department reported that the number of people filing for jobless benefits rose by less than expected.  Good news on the economy is generally bad news for mortgage rates but the Fed announcement is overshadowing these data points thus far.

Nothing new to report from Europe this morning.  Greek officials are resuming talks with creditors to try and achieve a steeper discount to its debt load.  Without a concession Greece may default on its debt as soon as March.

Current Outlook: neutral