Mortgage rates are better this morning compared to earlier in the week.
What a difference a week makes. Up until the Fed’s monetary policy statement last week, in which they announced they would leave quantitative easing (QE) in place, market consensus was that the economy was continuing to recover. As a result, rates had been steadily climbing.
Since last Wednesday the stock market has closed lower every day and interest rates have improved on fears that we may be headed for another economic dip. Bad news for the economy is often good news for mortgage rates.
In the Fed’s surprise announcement it was implied that they remain concerned about the fragility of the economic recovery. Furthermore, economic data released over the past week has been weaker than expected. This includes readings on Consumer Confidence, Durable Goods Orders, and GDP.
That said, weekly jobless claims were reported below expectations this morning which is an encouraging sign for the economy.
Mortgage rates are now at the best levels in 8 weeks. Given that my long-term outlook is unchanged (I still believe the Fed will unwind QE in the next 12 months) it’s tough for me to recommend floating anytime we see an improvement like this so I will remain in a locking position even though I admit I shifted to locking too early in this rally.
By the way, in case you’re wondering how a potential government shutdown is impacting mortgage rates it is not. The markets do not believe congress will allow the treasury to run out of money even though it may come down to the last minute.
Current Outlook: locking