Although mortgage rates have fluctuated up and down this week they are generally unchanged from Monday.
With the election behind us investors are now focused on the “fiscal cliff” which refers to a broad set of spending cuts and the expiration of the Bush-era tax cuts which is set to take place at the end of 2012. The Congressional Budget Office has warned that failure to deal with the “fiscal cliff” will likely lead the US back into a recession in 2013.
Over the next few weeks the markets will likely rise and fall on developments regarding a solution to this problem. If a solution seems more likely then I would expect interest rates to move higher and vice versa.
The European debt crisis remains relatively quiet. The Greek government was able to pass further austerity measures despite mass protests. The Spanish government successfully auctioned new bonds earlier today.
For now I expect mortgage rates to remain relatively low but we’ll be watching the “fisal cliff” debate closely.
As a reminder, Monday is Veteran’s Day so ‘rate update’ will be released on Tuesday.
Current Outlook: neutral