Last Week's Mortgage Rate Recap
Last week saw mortgage rates improve an average of .125 to .250 percent from the previous week. While each day continues to contain volatility, we enjoyed market improvements 4 out of 5 days with the largest gains coming on Monday.
Wednesday was clearly the most interesting day of the week. The minutes from the last Federal Open Market Committee (FOMC) were released and traders were once again reminded that several of the FOMC members favored "tapering" the amount of monthly bond purchases in the near term. While it was about half of the members that favored this approached, in previous minutes it was only one or two members that favored pulling back bond purchases. This shows a growing sentiment by Fed members that "tweaking" the amount of purchases will come at some stage. The timing of it is what traders keep guessing on. And this guessing is what has been moving the markets.
MBS sold off after the release of the FOMC minutes (worse rates for you) but then rebounded after Bernanke made comments that appeared to back track on the immediacy of the "tapering".
MBS rallied again on Friday on a weaker than expected Consumer Sentiment Index but our gains were capped by our ceiling of resistance located at our 10 day moving average.
This Week's Mortgage Rates Forecast
Mortgage Rates Currently Trending: NEUTRAL
This week there are a number of key economic releases but the major focus this week is Bernanke testifying in the House and Senate on the economy, employment and inflation. Likely he will field a lot of questions from politicians about what the Fed intends to do with its QEs and more grilling on the state of the economy and unemployment that refuses to subside. He goes before the House Financial Services Committee on Wednesday and then to the Senate’s Banking Committee on Thursday. At this moment markets continue to lean towards the Fed beginning to taper as soon as Sept but Bernanke is keeping markets on edge by changing is tune frm one speech to another.
BOTTOM LINE: Right now mortgage rates are taking a breath, but don't be lulled to sleep.Be sure to watch the live MBS (Mortgage Backed Securities) market with your Mortgage Loan Originator to stay a step ahead of lender reprices and to cash in on market gains that help mortgage rates. Be prepared for movement at a moment's notice, and beware the volatility that is still rampant.