The fiscal cliff talks were the primary influence on mortgage rates this week. As investor optimism for a deal rose and fell during the week, so did mortgage rates. For the week, mortgage rates ended just a little lower.
If no fiscal cliff deal is reached, the spending cuts and tax increases which will occur beginning January 1 are perceived as negative for stocks and positive for bonds. As a result, when comments from political leaders at the beginning of the week hinted at progress, mortgage rates moved higher and stocks gained. The reverse took place later in the week and especially on Friday following the failure in the House to pass the "Plan B" fiscal cliff proposal. The fiscal cliff talks most likely will continue to have a major impact on mortgage rates until a deal is reached.
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