Today Janet Yellen prepped the markets for a December 14th #FED #RateHike. It’s unfortunate that she didn’t do this after the election and maybe #MortgageRates would not have moved up over the last few days. #RateIncreases are likely to be gradual unless the FED continues to put-off a rate increase too long. Meanwhile, Jobless Claims are down to lowest they have been since 1973.
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Eric Rosengren, the Boston #FED President and a voting member, spoke this morning that a #FED #RateHike is “plausible” with a job market near full employment and rising inflation. The #BondMarket rallied, up 20 basis points–but will it be enough momentum to start lowering #MortgageRates? Mr.Rosegren voted for a rate hike back in September but then voted to not raise in October. All this back and forth is causing more disruption, not less.
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Did #FED raise the rates? Yes-indirectly they have with all their media chatter. While the FED did not raise the Federal Funds rate, they have impacted #MortgageRates by disrupting the bond market with their constant Media interactions. The more the FED talks to the media about holding rates the more worried the Bond Market becomes. We have seen huge sell-offs in bonds today as a result of this media noise.
Unfortunately, bonds sales=higher mortgage interest rates. Please FED, do stop talking. You’re making it worse, not better.
After the surprise Trump win, the bond market rapidly dropped as folks who were betting the #FED would raise rates realized that was likely off the table–driving mortgage rates up .25%. The #FED, who loves reasons to delay rate hikes, will hold the anticipated December rates increases based upon statements to the media (but not a guaranty they don’t raise then).This is setting the bond market on its heels as it had already factored the price impacts of the #FED interest rate increase into its matrices. As the bond market stabilizes this morning, I think we will return to lower rate levels over time.
Meanwhile, Jobless claims are down 11,000 landing at 254,000 claiming unemployment benefits, which was a better than expected outcome. So, let’s hope this is a sign of a strong hiring season during the rest of the 4th Qtr. and into 2017!
We have a new president–but what will this do to #mortgagerates? Trump’s win comes as a surprise to many and the markets don’t like “surprises.” While the FED has been foreshadowing rate increases, the decision to up rates will now be influenced by how things play out. If consumer spending slows, and/or the markets react poorly then it is likely the rates will hold steady in an attempt to steady the ship.
The #FED loves excuses to not raise rates. So, if you’ve been thinking about refinancing or making a change, it looks like there’s still time to take advantage of great rates.