Mortgage Rate Outlook for 12/15
On Tuesday December 16th
the Federal Open Market Committee (FOMC or "The Fed") will release a statement after its scheduled meeting. Many economists are expecting the Prime rate to be lowered to 3.5% at this meeting. One important thing to remember is that a lower Prime rate does not translate into lower fixed mortgage rates. See our article from November 16th http://www.hqworksforme.com/mortgage-blog/bid/6768/What-determines-mortgage-rates
for more information on what determines mortgage rates.
There are a couple of other news items coming out this week that could have an impact on mortgage rates. The first piece of data will be released on Tuesday is the Consumer Price Index (CPI). The CPI will give investors an idea of what direction prices for goods and services in the economy are going. A higher than expected reading (more inflationary) will be bad for mortgage rates while a lower than expected number (less inflationary or even deflationary) could provide support.
On Thursday the Philadelphia Fed Index is released. This reports on the level of manufacturing activity in the Philadelphia region and is seen as a strong indicator for national manufacturing activities. If this number is worse than expected it should provide support to mortgage rates because generally a weak economy leads to increased investment in fixed income, like mortgage backed securities (MBS).
Current 30 year fixed mortgage rates remain at all time lows and depending on how things look this week in the economic reports, they could be sticking around into the new year.