Mortgage rates rose to the highest level in 3 weeks after todays Fed Announcement. The move was a two-part process with initial rate sheets being weaker in the morning and mid-day reprices (lenders raising rates) following the Fed. The pace of the movement was moderate, leaving 4.0% intact as the most prevalently-quoted conforming 30yr fixed rate for top tier borrowers, but 4.125% is now much closer than it had been. Many lenders are already there today. Its important to understand that the Fed ending QE and todays rise in rates are not in a direct causal relationship. Market participants unanimously agreed that today would mark the end of the Feds third round of quantitative easing (QE3) and that part of the announcement was no surprise. Its also important to understand that, apart from the past 3 weeks, todays rates are the lowest in more than 16 months. The point is that mid-October was a bit of a wild time for the bond markets that underlie rate movement and todays higher rates are more to do with a correction to that wild move. In fact, bond markets ended up very little-changed from the trading levels in place just before the Fed Announcement. Bottom line, this was a move that was already in progress and todays volatility just made it slightly worse. It has been and continues to be the case that the markets broad reaction to the end of QE will drive the next leg of momentum higher or lower in rates, and with todays noncommittal closing levels, its too soon to tell which way well go.
Posted on: Thu, 30 Oct 2014 16:56:32 +0000
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