Mortgage rates are better this morning compared to where we started the week.
If you’re happy and you know it show up to work. Thousands of federal employees are relieved to be back to work this morning. In case you slept through the past 18 hours I’ll let you know that Congress managed to pass a deal to reopen the federal government and raise the debt ceiling.
And since we all had so much fun this time around Congress decided to extend the debt ceiling to February 7, 2014 which means we may get to repeat this exercise soon. In my view if this never happened again it would be too soon.
With the federal government back open for business one might think mortgage rates would be likely to rise since it will have a stimulative effect on the economy. However, given the ongoing uncertainty about the debt ceiling and the damage that has already been done with the government being closed for a couple weeks most analysts believe the Fed will leave quantitative easing in place into 2014. Hence, mortgage rates have modestly improved this week.
Will they continue to improve or have we hit bottom? This is a tough market to call. On one hand, mortgage rates have dipped in the 4th quarter for most of the past few years. On the other hand, we expect the economy to regain its footing over the long-term which would likely pressure rates higher.
For now I will shift to a neutral position.
Current Outlook: neutral.