Mortgage Rates Avoiding Drama Ahead of Fed WeekSep 11 2015,
Mortgage rates are doing absolutely everything in their power to avoid making any sudden movements ahead of next week’s potential volatility. It’s not mortgage rates per se, but rather, multiple market sectors have been trading in increasingly narrow ranges this week.
As we’ve discussed, next week’s Fed Announcement is the big deal on the near term horizon because it’s the first real opportunity for the Fed to lift its policy rate from 6 years at all-time lows. While this sort of rate hike doesn’t necessarily translate to mortgage rates, any major changes in Fed policy can cause volatility across markets. Historical examples of Fed rate hikes following longer stints at longer-term lows show multiple outcomes. That means there are indeed examples of Fed rate hikes followed byfalling mortgage rates. In other words, we’re talking more about the volatility potential and less about the likely direction.
With markets simply trying to bide their time until next Wednesday, trading levels didn’t change much today in the mortgage-backed-securities (MBS) that underlie mortgage rates. There was some slight improvement, which translated to modestly lower closing costs for the same old 4.0% that most lenders continue to quote on top tier conventional 30yr fixed scenarios. 3.875% is still available among some of the more aggressive lenders, while 4.125% is far less common.
Reference Market News Daily
Jonathan Burdick-Executive Vice President – Sales/Lending