Mortgage Rates & Trends 10/7/2013

Last Week's Mortgage Rate Recap

 

Mortgage Rates Currently Trending: NEUTRAL

Last week saw rates remain flat, with almost no change to rebate pricing as the reflection of MBS (Mortgage Backed Securities) trading very tightly within a well defined ceiling of resistance that traders were unwilling to trade above due to the uncertainty of the length of the shutdown.  Also keeping market performance and interest rates stable was the lack of economic reports that would normally move the markets, most notably the jobs reports that were missed on friday.  This economic data was not released due to the government shutdown closing the departments that do the reporting.  After weeks of volatility, the stability seems welcome.  However, don't let it lull you into a false sense of security, as we are simply building a pyre and waiting for the spark.   

 

This Week's Mortgage Rate Forecast

Mortgage Rates Forecast: NEUTRAL, but high threat of volatility

This week will again show the calm before the storm, as the markets hold their breath for the next move.  Also keeping the markets stable will be that many economic reports that are scheduled for release this week will not be released.  The biggest event of the week was supposed to be the release of the FOMC's minutes from their last meeting.  This data will be released (on Wednesday, 10/09) but traders were looking for insight from the minutes as to when the Fed might begin to taper QE3.  However now that point is moot as teh Fed is effectively forced to keep their bond purchases at current levels as an attempt to offset the damage to the economy that the government shutdown is causing.

Expect traders to start getting nervous as we are just 10 days away from reaching our debt ceiling, and Congress continues to play with fire.  The markets have remained calm up to this point, but expect tensions to continue to rise as the deadline draws near.  As the tensions rise, this may play out well for mortgage rates as traders continue a flight to safety in bonds, and improve the pricing of Mortgage Backed Securities.  But any improvements may very well prove to be short lived when the dam breaks, so be very careful.     

BOTTOM LINE: There is risk to floating right now, but also potential reward.  However, once news breaks that the shutdown is no longer an issue and the debt ceiling is being dealt with, be prepared to act quickly.  It is critical this week to work with your Mortgage Loan Professional to stay a step ahead of lender reprices and market trends to protect your mortgage rate.