Mortgage Market Update
Mortgage Market Update- December, 16 2012
This week’s financial data is rather mixed and may even be a bit confusing. The continued lack of progress on the fiscal cliff negotiations seems to be causing the stock market no end of grief and resulted in an overall downward trend at week’s end. The overall market projection continues to show downward pressure as Congress and the White House continue the game of playing chicken with the financial health of the nation.
Chairman Bernake announced on Wednesday that the Fed would take a new approach to financial stimulus given the lack of action on the part of Congress to offer much in the way of economic stimulus. For the first time, the Fed will take the unprecedented move of tying their stimulus program to unemployment rates. Bernake announced on Wednesday that the Fed will continue to repurchase not only mortgage backed securities but also Treasuries until unemployment rates fall to 6.5 percent from their current 7.7 percent rate. For the market, this means 40 billion a month in mortgage notes and an additional 45 billion a month in long-term treasury notes. The expectation is that this will help keep mortgage rates lower. Unfortunately, for those who are saving money, this is not such good news as it will continue to keep savings rates at record lows as well.
Gold prices are continuing to rise,
This week, mortgage rates increased slightly early in the week but as the week ended, the rates finished modestly downward. For home owners who are searching for refinancing opportunities, this is good news and it’s certainly good news for those who are interested in buying a home. Conventional wisdom is that if you have an opportunity to lock in your rate, it might be a good idea to do so since there is a clear possibility that rates could increase, even as the fiscal cliff approaches. After all, with rates below 4 percent, the chances of them heading upwards is much more than the risk of downward pressure.
We can expect the market to watch with bated breath as the White House and Congress battle with each other over spending cuts and rate increases. What is most likely is that taxes will increase after the first of the year on at least the top one percent of earners, but if negotiations do not yield a good result, there is also the chance that we could head over the fiscal cliff which will cause a great deal of uproar in the markets. After all, most of us recall the uproar during the debt-ceiling negotiations over the summer. This is another fight that will be pending shortly after the first of the year and already there is concern about potential forced cuts in programs that could impact the markets.
provide you with the information you need to make an informed financial decision.
Disclaimer: Mortgage Market update is for December 10-14, 2012. This article is for informational purposes only. The mortgage market update should not be used for rate lock guidance.