Rate Update October 28, 2010

Mortgage rates are unchanged this morning.

Despite better than expected weekly jobless claims numbers and earnings in the stock market mortgage-backed bonds (MBS’s) are trading higher.

The financial markets remain focused almost exclusively on next Wednesday’s Fed policy statement regarding QE2.

Following the Fed’s September 21st statement in which they indicated that they were prepared to reengage in quantitative easing mortgage rates dipped by .25% in anticipation of aggressive action.  However, over the past week mortgage rates have reversed back to the levels seen prior to the Fed’s announcement on expectations that any Fed action will be small and gradual.

I believe that there is some room for rates to reverse lower but will likely recommend locking on any gains.

Current outlook: floating