Mortgage Rates Not Much of a Change Today

Mortgage rates were slightly up and down today, but truthfully, not much change from yesterday’s close.  Waiting, waiting for the world to change (remember that song) applies here now with high levels of differences of opinions when it comes to interest rate outlooks. The FOMC policy statement tomorrow afternoon, always critical but this time we believe even more so. No doubt from all of Yellen’s comments and comments from most other Fed officials the Fed wants to get out of its easing and wants to raise the FF rate. The question is not what the Fed and other economists want to do, the question is, should the Fed do it now? Given the swiftly declining global economy does the Fed believe increasing the FF rate would not add to the slide? Since the last FOMC meeting global equity markets have been hit hard, China’s markets, Europe markets under pressure and here it is beginning to look like the US might be the next shoe to fall. It is not likely Yellen and the FOMC will admit it outright in the statement, maybe even continuing to puff up the economic US outlook and sweep global markets aside. Markets are becoming less and less reliant on what comes from the mouths of Fed officials. I still do not believe the Fed will move rates higher this year given what is happening around the world and the serious implications for the US.

Tomorrow at 1:00 pm is the FOMC policy statement. Before that, the NAR reports pending home sales for June.   US home ownership the lowest since 1967 - spin it any way you want, the decline in homeownership has a very negative impact on economic growth. No new furniture, carpet, appliances, and a multitude of other ancillary goods that grow when housing grows.

July consumer confidence was the lowest since Sept 2014. The June confidence index was revised lower. The Present Conditions Index fell in July from what was in June. The Expectations Index dropped to the lowest expectations reading since falling in February 2014. Consume confidence is a direct response to equity market activity and July was not good for US stocks and especially for global stock markets.

In summary, the rally of the last few days seems to have stalled, with treasuries pulling back some today taking lender rate sheets with them. We are in the middle of an auction week and it isn't uncommon for rates to worsen before the auction cycle completes. Once over, we quite often get a relief rally but this week we do get the FOMC. Any indication of a faster or sooner rate hike cycle will cause rates to worsen quickly. The best bet is too lock if short term, but cautiously float if you are not closing by next week.