Mortgage Rates Fall Back to May 2013

Mortgage rates continued to fall, especially after the FOMC meeting was over, back to the levels we have not seen since May 2013. The net effect was an increased prevalence of 3.625% among conforming 30yr fixed rate quotes for top tier scenarios, with even some people wanting to go as low as 3.50% with the additional fees imposed for such. 

The FOMC policy statement always has certain people look at and impress the media when interviewed, no exception this time around. The Fed saying it will be patient when thinking about increasing interest rates. Without burdening you, the statement was about what we saw at the December meeting. Fedspeak at its finest. The Fed sees the risks to the outlook for economic activity and the labor market as nearly balanced. The Committee expects inflation to rise gradually toward 2% as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate.

The Fed’s statement and the new low crude price drove interest rates lower as we continue to expect rates will move even lower. The yield ended the day at 1.72% down 10 bps from yesterday’s close. Again, I remain quite bullish for interest rates moving lower. I do not couch my forecasts, although there has been one or two occurrences in the last 20 years where I have been wrong (but do not talk to my wife as she will tell you that is not true!) 

With little to no inflation, higher US rates than other sovereigns, the US Treasury is worth buying. Economies are globally weakening regardless of what the Fed believes currently. The policy statement mentioned global concerns - in other words the Fed is concerned about what is occurring around the world as much as in the US. Interest rates one day will blow up higher, but when I do not want to guess. In the meantime with the outlook for global growth is weakening, moving to US treasuries is an appropriate hedge for domestic and global money holding large stock investments.

In summary, the bond and mortgage markets are set up for a lot of volatility at these levels. The stock market continues to fall, the indexes tried to improve but after the FOMC statement the key indexes lost their minor gains and collapse into the close. The stock market is likely to continue to decline, a support for US interest rates. We might see some weakening tomorrow after the large gains today, but floating is still a good option.

Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit my website at www.CallTheMoneyMan.com. I have access to real time Wall Street data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.