Mortgage Rate Update September 12, 2016

Mortgage rates have inched higher but still remain incredibly attractive from a historical perspective.

The financial markets have reacted to recent Fed speeches which have led the public to believe that there is a reasonable case for a rate hike at the next monetary policy meeting which is taking place September 20-21st.

Today we heard from three different Fed speakers.  Starting tomorrow Fed officials enter a “blackout” period where no public comments can be made regarding monetary policy until after the policy statement is released next Wednesday.

The financial markets are a little spooked about an upcoming rate hike.
The financial markets are a little spooked about an upcoming rate hike.

In essence the Fed has reiterated what we already know.  The Labor market is healthy and warrants a rate hike.  However, inflation remains tepid and the Fed would like to see a little more price pressure before continuing their rate hike campaign.

I still believe the Fed will not raise short-term interest rates until their December meeting but speaking of inflation the economic calendar has two important inflation related releases.  The first will come on Thursday with the Producer Price Index and the next is released Friday which is the Consumer Price Index.  Should either of these show stronger than expected price pressure it could spark another small jump in mortgage rates.

I would advise locking as I think borrowers have more to lose than to gain at this point.

Current Outlook: locking