Mortgage Rates Not Moving Today

Mortgage rates are not moving too much today after the swing we experienced yesterday after the FOMC meeting ended.  As I stated yesterday, it was going to be volatile – and it did not disappoint us.  The Fed increased its FF rate by 0.25%, as it was widely expected. What was not expected was the more dovish tone of the policy statement and Janet Yellen’s soft tone that the Fed will use a “gradual” approach toward increasing rates. The quarterly Fed projections on inflation and GDP growth was also mild to say the least -  2.1% GDP growth in 2017 and 2018, with inflation holding at or near 2.0% for this and next year. In the meantime, the OECD and other groups have increased the growth output globally. The FOMC and the Fed’s quarterly data (see yesterday afternoon report) is calling for two more increases in rates this year.

This morning we got a mixed bag for new construction. New Home Starts were better than expected, but Building Permits were lighter than expected.  Overall, they are still moving in the same relative trend line which is growth, but at too small of a level to offer any relief to very tight inventory levels. Initial Weekly Jobless Claims were in line with expectations, as the more closely watched 4-week moving average moved to 237,250. The Philly Fed Report showed Business Optimism in the Mid-Atlantic region continues to show strength and was higher than expectations as new orders continue to show improvement. There was no immediate reaction to any of these reports. 

The Netherlands went to the polls yesterday; the result was that the current Prime Minister Mark Rutte won and avoided the potential victory of challenger Geert Wilders, he championed leaving the EU and against immigration. Angela Merkel, German chancellor, called the result “a good day for democracy” and added that she “was very happy that a high turnout led to a very pro-European result, a clear signal.” Looks like the EU breakup took a hard hit.  Next month France will go to the polls in the first of two stages of their election process.

I am looking for mortgage rates to be far less volatile today. Nothing left in news to move mortgage rates significantly from where we are now, as of 11:00AM, the 10yr is at 2.53% were it opened today, and MBSs are flat.  I am not enthused about floating, and I would recommend that you lock in these gains especially if you are closing in the next 15 days and missed the boat up to this time.