Rates,
Well it has been a VERY interesting 2 weeks, so even though the economic reports have all been quite good and up beat, it has been all about the Fed and what they speak!
So to go back in time, about 4 weeks, Federal Reserve indicates that they are going to stop purchasing $85B in mortgage back securities sooner rather than later. BOMB Rates take a .50 increase.
1 week later, it is reiterated by the Federal Reserve that, yes, they are going to start the process of unwinding the purchase of MBS, as soon as September. BOMB, rates take another hit, almost 1 full point.
Then commentary come out that because of the rates, mortgage application drop and people start to scream that just when the housing market is coming around the Fed is pulling the carpet out from under us.
So fast forward to last 2 Wednesday’s ago, Fed, after hours, indicates that maybe they are not going to do it so fast. Market improves and the rates improve, just slightly.
Then this week, Federal Reserve in front of Congress, back tracks more, saying that they are going to focus mainly on unemployment and will start reducing once the unemployment would starts getting close to the 6.50% mark, currently 7.8%.
So Rates relaxed this last week, not by much, I would say we have seen anywhere from .125% to .25% improvement. But mainly because the lenders don’t want to be caught with their pants down again if there is another big slam from the Fed.
At this point in time, I just want stability for a while.
So the forecast is that rates are going to still trend up, that is a fore gone conclusion, but hopefully at a much slower pace.
I am really focusing on any economic reports that deal with unemployment, especially the BLS report the 1st Friday of each month.
With that being said, it only takes a sentence out of the Federal Reserves mouth to cause the markets to crash, but most talking heads think the Fed has learned and will be a little more cautious about speaking about rates in the future.
Right now, I would still say lock them when you can. Gambling my pay off a little, but just like Vegas, those hotels are not paid for by the Buffet lines.
