Rate Update March 16, 2010
Mortgage rates are unchanged from yesterday.
The financial markets are fairly quite this morning as we await the Fed’s policy statement later on. Let’s not forget that the Fed does not directly set mortgage rates. However, the Fed’s monetary policy which directs short-term interest rates and their comments about the economy carry significant weight on Wall Street. Therefore, they do impact mortgage rates indirectly.
We expect the Fed to confirm that they plan to exit the mortgage-backed securities market at the end of March. I wrote about the potential impact this could have on mortgage rates last year. Some analysts believe the Fed will also delete the term “extended period” from their comments about providing monetary stimulus. I am less certain about the latter.
Either way, the Fed can influence mortgage rates so we’ll need to keep an ear open later today.
I continue to recommend a locking position because I believe the risks of floating outweigh the risks of locking.
Current outlook: locking bias