Mortgage Rates Hold Perfectly Steady Despite Massive Underlying Volatility January 22, 2015 Mortgage rates didnt budge today. Thats impressive considering the amount of volatility in financial markets leading up to and following the European Central Bank (ECB) announcement. Markets widely expected the ECB to announce a new quantitative easing package today. Thats indeed what happened, but when it comes to European monetary policy, things are never as cut and dry as they are for other central banks that arent trying to balance the needs and laws of 19 separate countries against the economic realities and legal constraints of the broader Eurozone. If this sounds complex, thats because it is. And that makes for wide-ranging reactions in financial markets. Not only that, but financial markets have this well-known habit of trading in advance of actual events based on expectations and even rumors. Todays ECB news had plenty of both. Consequently, global bond markets (which eventually trickle down to affect specific areas of domestic bond markets, including mortgage rates) were all over the place for most of the day. Mortgage rates had a plan though. It involved adjusting rates higher over the past several days and leaving plenty of extra room for the volatility that was very likely on the way. The plan (whether intentional or not) worked perfectly, leaving lenders with very little need to change rates from yesterday and very little need to issue mid-day reprices during the day. By the end of the day, the trading levels in the secondary mortgage market were fully justifying the decision for rates to remain unchanged.
Posted on: Thu, 22 Jan 2015 23:03:58 +0000
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