This week we saw a drop in mortgage rates with the low point on Wednesday, but as of this morning the mortgage bond prices were back to Monday’s opening price.
As usual news out of Europe has been dominating the market this week, affecting rate trends around the world. Fear is growing that Europe’s debt problem is becoming a global concern. Also, China’s growth slowed to 7.6% this last quarter. This is from 8.1% the previous quarter; the main reason seems to be Europe’s debt problem. In other rate affecting news from around the world, Italy’s debt rating was downgraded today by Moody to Baa2 rating which is one grade above Spain and two grades above a “junk rating”.
Probably the most notable news affecting mortgage rate trends was on Wednesday. The Fed released the minutes from their Federal Open Market Committee (FOMC) meeting. These minutes are a summary of the discussions from their last meeting. The market was generally disappointed that there was no real consensus on starting another quantitative easing program.
Another easing program would push rates even lower, thus creating an increase in borrowing and stimulating the economy. How much lower rates can really be pushed and how big of an effect it would have on the economy is up for debate. But the market was expecting it and I think the lack of confirmation in the FOMC minutes is what made rates change their course negatively on Wednesday.
Moving into next week, the rate trend seems to have lost its momentum towards dropping. However, I do not think we will see mortgage rates increase much either. Of course this could quickly change for better or worse with some drastic news out of Europe or any comments from the Fed on another easing program.
