Mortgage Rate Update November 15, 2012

Mortgage rates are slightly worse compared to Tuesday.

Generally speaking when stocks decline interest rates also fall.  The Dow Jones Industrial Average has lost about 1,000 points in the past month but mortgage rates have improved only modestly.

One catalyst that could help rates move lower is Fed action.  In addition to buying $40 billion in mortgage-backed securities each month the Fed is also running “operation twist” which is another monetary stimulus designed to keep long-term rates low.  The program is set to expire in December but in minutes released yesterday from their last meeting Fed officials signaled that they were prepared to extend bond buying if the employment picture continued to improve slowly.

If anything the employment picture is likely to worsen given the impact of Hurricane Sandy.  In fact, weekly jobless figures out today were up sharply.

Political leaders continue to talk about their plans to avoid a fiscal cliff but credible negotiations have yet to take place.  As long as uncertainty reigns mortgage rates should stay low.

Current Outlook: neutral