Mortgage Rate Update November 21, 2013

On Monday we shifted our outlook to locking which proved to be accurate because at least for now mortgage rates are slightly worse.

Expectations for the Fed tapering quantitative easing (QE) continue to see-saw back and forth.  When the markets think tapering will occur sooner rather than later mortgage rates rise and vice versa.  Yesterday, minutes from the last monetary policy meeting were released and showed Fed officials spent much of their time discussing how to wind down QE but failed to explicitly lay out a timeline.

The Fed is between a rock and a hard place.

 They have yet to receive consistent jobs reports showing strong growth so they are hesitant to pull back on the program.  At the same time the size of their balance sheet is ballooning beyond their expectations which could fuel future inflationary pressure.

As long as the Fed is ambiguous about their timeline the financial markets will be jittery.  I would expect rates to cycle up and down as sentiment see-saws back and forth.

In economic news inflationary pressure at the retail and wholesale levels of our economy remains soft leaving the door open for the Fed to leave QE in place.  Weekly jobless claims decreased again last week.  The data shows that fewer workers are being laid off but as we’ve seen this does not necessarily mean that employers are hiring at an aggressive pace.

I wouldn’t be surprised to see rates cycle back down to the levels we say earlier in the week but for now momentum is working against us so I will remain in a locking stance.

Current Outlook: locking