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Bart Castelli

Mortgage Rates Experience First Gain in Two Weeks

Tuesday, September 16, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 - Message

Mortgage rates experienced their first gain in two weeks, even though they were small, it was still in the right direction. The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains at 4.25%, with the closing costs associated with this being the only change, as 4.375% still is becoming more of a reality with no discount points.

The FOMC meeting began this morning and concludes tomorrow afternoon. Until this morning there was almost a complete belief the Fed would change the language in the policy statement from the phrase " interest rates will stay low for a considerable period of time" to something more specific on when the Fed will begin increasing short term rates. That belief had been the focus for the last two weeks, but now that idea has lessened somewhat and the "new" thinking at the last minute is that maybe the Fed is not in any hurry to begin increasing rates. Following the bouncing ball at times, especially when the Fed is in play, can be difficult. It isn't unusual for markets to have rock solid options ahead of a key report or anything to do with the Fed; up until the fact, then waffling begins.

Also news that China's central bank will add more stimulus ($81.4B) to China's five largest banks to increase growth drove commodity prices higher and ran the US stock market up. Chinese regulators also increased banks' capacity to lend money by changing the way loan-to-deposit ratios are calculated. The DJIA rallied 140 points before settling back into the close, but still a strong improvement on a day that no movement of substance was expected. The bond and mortgage markets didn't bite on the "new" Fed thoughts or China's stimulus however.

Tomorrow, a big day - unless you were Rip Van Winkling the last two weeks that isn't news. The FOMC meeting policy statement at 1:00 pm, Janet Yellen's press conference at 1:30 have the spotlight tomorrow. There is however another FOMC report that we are looking forward to seeing, the quarterly FOMC economic outlook and projections, including what the group expects for GDP growth going forward. Since Q4 last year each quarterly data the FOMC has released has lowered the growth expected in the previous data.

Keep a strong look at the markets and continue to cautiously float if you do want to take a risk. Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.

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