Rate Update October 29, 2010
Mortgage rates are better this morning.
This morning’s 3rd quarter GDP report from the Commerce Department showed that the US economy grew at a 2% annualized rate during the months of July-September. Although this figure is better than the 2nd quarter it is still considered to be too sluggish for significant gains in the employment market. Other data in the report suggests that inflationary pressure, the key driver of mortgage rates, remains weak. Overall the report is interest rate friendly.
As I’ve been reiterating here on ‘rate update’ the markets remain focused on next Wednesday’s Fed monetary policy statement. Since the Fed’s last meeting on September 21st long-term rates have dipped bottoming out in the middle of October on expectations that the Fed would be aggressive with further quantitative easing. However, over the past couple week’s rates have reversed higher. I maintain my belief that we’ll see improvements either right before or shortly following the Fed’s statement. I am targeting that timeframe for locking.
By the way, the US Fed is not the only Central Bank meeting next week. The European Central Bank, Bank of England, Bank of Japan, and Reserve Bank of Australia all have scheduled monetary policy meetings so it could get interesting.
Current outlook: floating