Rate Update September 20, 2010
Mortgage rates are unchanged today.
Since mortgage rates hit all-time lows about a month ago they’ve ticked up slightly. The reason? As The Economist and Businessweek magazines pointed out over the weekend pessimism surrounding the likelihood of a double-dip recession seems to be waning and the realization that the economic recovery will be slow and steady seems to be the gaining support. Therefore, the threat of deflation is less and rates have risen modestly.
That could all change tomorrow when the Fed delivers its policy statement following their 2-day monetary policy meeting. It is widely expected that they will leave short-term rates near 0% but what the markets are interested to learn about is whether or not they will reenter the US Treasury bond market to push long-term rates lower. If they announce an aggressive program I would expect mortgage rates to benefit.
The economic data this week is housing intensive. Many analysts believe that since it was the housing market that took us into this recession it will have to be the housing market to lead us out. Better than expected housing data would likely boost stocks and hurt mortgage rates and vice versa.
I continue to believe locking is the best play.
Current outlook: locking bias