Mortgage Rate Update October 24, 2013

Mortgage rates are unchanged this week.

With the absence of any reassuring economic data this week interest rates remain at multi-month lows.  In case you missed it Tuesday’s all-important jobs report for September came in below expectations.  The report showed that only 148,000 new jobs were created during the month and the Labor Department revised previously released numbers lower.

Bad news for the economy is often good news for mortgage rates.  The release makes it more likely that the Fed will leave quantitative easing (QE) in place at least into the first part of 2014.  Speaking of the Fed, the monetary policy committee will meet next week which means we’ll get fresh comments on their outlook.  If they explicitly confirm support for leaving QE in place this could help rates move lower.

Last week I indicated why I believe there are some compelling reasons to think mortgage rates could improve in the fourth quarter.  One reason is that mortgage rates have improved during the fourth quarter in six of the past seven years.  The chart below demonstrates this.

Q4 mtg process
Of course, past performance is no guarantee of future results but at least for now I am going to maintain a long-term floating bias.  A word of caution, due to technical trading patterns I wouldn’t be surprised to see rates worsen slightly before any further improvement.

Current Outlook: near-term locking bias/ long-term neutral