Rates See Modest Gains

Mortgage rates made some modest gains today despite the fact we had two major announcements from central banks today (Japan overnight and the Fed this afternoon).  These are always points that we need to consider as that is what has made the markets so volatile in the past several weeks.

As expected the Fed did not move today.  Yellen however did say in her press conference that one increase would be appropriate this year. That likely means December although asked if November would be possible ahead of the election she said the Fed is not politically influenced.

Although she responded that the Nov 1st meeting is ‘live’ and that the Fed is not politically influenced, there will no increase in November. We now have three more months to deal with the Fed and its regional officials talking in circles. The December meeting is on the 13th and 14th. A lot of incoming data to digest before that meeting but she did say today one more increase this year is likely. According the Fed’s forecasts, the US economic growth will not exceed 2% until 2019 and that is a dart toss at this time. Inflation not reaching 2.0% clear through 2019 (note - the Fed’s forecast are not reliable, mostly too optimistic).

In summary, following the FOMC announcements, bonds have improved to their best levels in about a week.  There is quite a bit of volatility, so lenders will be very slow to pass along any improvements.  Based on that, it might be a time to consider floating, or at least lock if you are going to close in the next 15 days.