Mortgage Rate Update June 17, 2013

Mortgage rates are priced slightly better compared to last Thursday.

Two data points out this morning showed stronger than expected economic activity.  First, the Empire State manufacturing survey showed much stronger than anticipated results.  Second, the National Association of Home Builders housing market survey came in at the highest level since 2006.  Good news for the economy is often bad news for mortgage rates but they appear to be holding steady thus far.

Looking ahead for the rest of the week the economic calendar is jam packed with significant releases.  The most significant is on Wednesday when the Fed concludes their 2-day monetary policy meeting and releases their policy statement.

As we know the Fed has already indicated that they plan on tapering their quantitative easing (QE) program, which is designed to drive long-term interest rates down (including mortgage rates), once the recovery can stand alone.  We don’t expect the Fed to announce any changes to QE in this statement but their view on the health of the economy will influence the markets’ view on when the Fed will begin to act.  If the Fed’s tone sounds optimistic it would likely pressure rates higher and vice versa.

From a technical perspective the picture for mortgage rates look promising.  Mortgage-backed bonds bounced of a layer of support in the later half of last week and continue to trade above that level.  As long as that is the case I will recommend floating.

Current Outlook: floating