Mortgage Rate Update January 31, 2013

After rising sharply in the latter part of this week and very beginning of this week (causing me to switch my outlook to floating) mortgage rates have stabilized and in some instances note rates have even improved by .125%.

In their monetary policy statement yesterday the Fed reaffirmed their commitment to keep quantitative easing in place to help support the economy.

Since the release of their December meeting minutes, in which a timeline for discontinuing the stimulus was discussed, mortgage rates have increased.  Fed Chairman Ben Bernanke is scheduled to testify to Congress in late February where he may elaborate on the specific economic benchmarks the Fed will be tracking to determine if easing is needed.

Speaking of the economy…..GPD numbers out yesterday show the economy contracted slightly in the 4th quarter of 2012.  A reduction in government spending was the primary drag on growth.  After falling substantially over the previous two weeks weekly jobless claims rose this week making it hard to tell if the labor market is truly improving.

The all-important jobs report is due out tomorrow.  Analysts are currently expecting around 200,000 new jobs created in January and for the unemployment rate to be around 7.7%.  Since the Fed is watching the labor market to help them determine when to remove quantitative easing programs the monthly jobs reports scheduled for release over the next few months will have extra significance.

Current Outlook: neutral