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Forwarded exclusively
by:
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Bob Rosenbaum
The Rosenbaum Lending Group
Office: (703) 879-5200
Email: Bob@MyTalentedLender.com
website: www.MyTalentedLender.com
NMLS#: 649782
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Monday, October 21, 2013
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What happens to rates now that the
government shutdown is over and the debt crisis has been averted?
Now that Washington D.C. has gotten our government up and
running again, and the fear of defaulting on our debt has been pushed off
until after the new year, where does that leave mortgage interest rates?
1) Talk of tapering has all but disappeared
In September, the markets were driven on
speculation of Fed tapering back the purchases of Treasuries and MBS that are
part of QE3. The fear of tapering helped to drive interest rates up,
with concern that actual tapering would lead to even further mortgage rate
increases. However, the government shutdown is expected to have a
strong slowdown effect on our economic recovery, which has pushed back all
talk of tapering. Added to that is the transition next year of Fed
Chairman from Ben Bernanke to Janet Yellen, which will also
delay talk of tapering. This is good for mortgage interest rates.
2) There will be a flood of
economic data releases
Expect intraday volatility as many missed
economic reports will be released now that the respective government
departments are back to work. Although September data points are
not likely to be seen as affected by the shutdown, the data isn't likely
to garner as much credibility as usual with traders as the markets try to
assess how serious the shutdown's impact was on consumers and future job
growth. This could cause volatility with mortgage interest rates.
3) The government shutdown is
expected to stunt the economy
Many economists feel that
the government shutdown was bad for the economic
recovery. Just how bad though has not been calculated yet.
Regardless, when the economy stumbles, that always bodes well for MBS
(Mortgage Backed Securities) and the bond market in general. Until we
see that the economic recovery is back on track, it relieves pressure
from mortgage rates. This is good for mortgage interest rates.
 Last Week's Mortgage Rate Recap
Mortgage Rates Currently
Trending: LOWER
Last week saw rates improve an average of .250%, depending
on the lender, as MBS (Mortgage Backed Securities) pricing improved
on news of the government shutdown being lifted and the debt crisis being
averted. They did run out of steam however as they approached the
102.00 Resistance Level, meaning that our march to lower rates may have run
out of steam. We have been trading within the same very tight trading
channel since the Fed announcement not to taper on September
18th.
This Week's Mortgage Rate Forecast
Mortgage Rates Forecast:
NEUTRAL, but high threat of volatility
This week we will be dealing with MBS pressing up
against the 102.00 Resistance Level, as well as the release of economic data
that was not released due to the government shutdown. There is no
reason for us to see a large increase in rates, but we may see an increase of
.125% to .250% this week if the 102.00 Resistance Level holds. However,
if we can convincingly break above this level, we may find better interest
rates on the other side.
BOTTOM LINE:
There is risk to floating right now, but also potential reward. The best
course of action is to stay in contact with your Mortgage Loan Professional
to watch the market in real time to stay a step ahead of lender reprices and
market trends to protect your mortgage rate.
RateAlert’s Most Trusted Mortgage Lending Professionals:
This commentary has been sent to you by the Mortgage Loan Originator (MLO) above because they thought you may find it interesting or helpful. The views and opinions offered do not necessarily represent the views of your MLO. Please contact them with any questions or to find out more about the information listed herein and how to work with them |
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