Today is the Fed day and it has chosen to cut the discount rate by .25%. This was expected and it came to pass. More importantly, the Fed Policy statement changed a bit and market experts are taking the revisions as indications of no additional rate cuts in December.
In short, interest rate sensitive investments are unhappy with the news and mortgage rates will react similarly. Two things are bothering mortgage rates, good economic growth (excluding housing) and perceived inflationary pressure. Remember, when our economy is strong, there is more of a demand for money and the "rent" (interest expense) on money goes up. It's that basic economic theory that about half of us slept through in college.
From a technical point of view, prices have broken through the first level of support but have not tested the second level of support. All in all, it would be prudent to lock in rates here before they get any worse. This is especially true of you have a loan closing within 30 days. Those that chose to lock rates last week, as suggested, find themselves at rates about .25% lower than what will be available tomorrow.
Call me if I can help with anything!
Claude Cousins
Sr. Vice President
Office 501-320-4902
Fax 501-320-4939
Cell 501-350-8040
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