Mortgage bond prices finished the week near unchanged which held rates steady. Trading started on a slightly positive note amid no data Monday. The 2-year Treasury auction Monday was met with weak demand. Consumer confidence printed at 96.5 versus the expected 93.5. Thin trading was evident throughout the week. The 5-year Treasury auction Tuesday and 7-year auction Wednesday were also met with poor demand both domestically and abroad. Weekly jobless claims were 287K versus the expected 269K. The MBS market closed early Thursday and will be closed Friday for the New Year's Holiday. Mortgage interest rates finished the week better by 1/8 of a discount point. The Year Ahead The future of the economy will continue to be debated. There is no certainty in predictions but the recent data and Fed statements clearly show continued signs of improvement. The Fed is now talking about raising rates again possibly early 2016 depending on the data. The effect on the housing sector, which remains a vital part of the economy, remains uncertain. However, the last thing the housing market needs is higher rates. What we can be certain of is the likeliness that mortgage interest rates will become volatile as we get closer to the next Fed rate hike. Historically, mortgage interest rates seem to improve slowly. In contrast, when rates increase, they often do so quickly and furiously. One negative day often erases a week of positive improvements. The Fed isn't the only player in the financial markets and there are many others buying and selling securities. Remember that the Fed does not directly dictate that mortgage interest rates will be at a certain rate. Rates are determined by the supply and demand for mortgage-backed securities and can change rapidly hour to hour. Now is a great time to take advantage of mortgage interest rates at these still favorable levels.