Mortgage rates moved even further downward than expected last week as the market continued to absorb the Fed’s decision not to begin to taper QE3. Comments from some Fed officials also provided additional insight that the Fed could delay the tapering of its monetary supports a bit longer than many analysts expected. Economic news for the week continues to be mixed, with New Home Sales climbing another 7.9%, but multiple indicators of consumer moods moved downward.
Political brinkmanship may take center stage for mortgage rates again this week, with Washington again flirting with a partial government shutdown. If a last-minute compromise is not reached, mortgage rates have a high probability of moving downward. Even if an agreement is reached, the details of that agreement will have ramifications for rates. The more uncertainty that politicians leave in an agreement, or the shorter the term of the keeping the government running, the more likely rates are to be constrained. Any additional weak economic news will also pressure rates downward.
(Courtesy of Joe Massey, Castle & Cooke Mortgage)