Rate Update Septembewr 16, 2013

In last Thursday’s ‘rate update’ I shifted to a floating position largely because I did not see a compelling reason to lock.  I can’t say I necessarily saw a compelling reason for rates to improve either but if nothing else I figured floating into the weekend would buy a consumer more time with little risk.

As it turns out mortgage rates have improved this morning on a surprise development in who will become the next Federal Reserve Chairman.  Larry Summers announced over the weekend that he would withdraw his name as a candidate for the job leaving Janet Yellen as a virtual lock to win the appointment.

As I’ve written previously in ‘rate update’ Yellen is viewed as a more interest rate friendly person for the job which is why mortgage rates are about ~.125% better across the board this morning.

Speaking of the Fed the long awaited September 18th monetary policy statement will be delivered on Wednesday.  As I’ve been writing for some time now the market is widely expecting the Fed will announce its plan to unwind quantitative easing programs that are designed to keep long-term interest rates low.  The consensus is that the Fed will reduce its monthly bond buying by $10-$15 billion per month until the entire $85 billion is gone.  Should the Fed announce a figure closer to $10 billion then we may see rates improve a little more and vice versa.

The economic calendar is fairly busy this week with inflation and housing data scheduled to be released.  However, these reports will be overshadowed by what’s happening at the Fed.  For now I will maintain a floating position.

Current Outlook: floating