It’s been a busy summer for my office in both purchases and refinances as rates improved to 12 month lows. The industry has been expecting rates to move higher as the Fed eased their bond purchasing program, but International conflicts overseas have kept rates low as worried investors purchased up Treasury bonds in turn keeping rates low and demand high. We may be seeing an end to this as rates have been steadily ticking up since the end of August, with the 10 yr Treasury yield moving from a 12 month low of 2.34% on Aug 29th to 2.61% last Friday. Mortgage rates have increased along with this but not much. 30 yr fixed rates are still in the low 4’s and considerably better than they were at the start of the year.
This week the FOMC meets again to discuss our economy and short-term interest rates. Verbiage from their Wed press conference will be closely scrutinized and the market will be listening for clues as to when the Federal Funds rate will start to be increased. Employment figures heavily tie into this decision for the Fed and the August number were not so good with far fewer new jobs than the market was expecting. Investors largely ignored the numbers on Sept 5th and Treasuries have been on the rise ever since. If the Sept jobs report shows similar poor job growth and the Aug report is not revised then we shouldn’t expect the Fed to raise the FF rate any time soon. On the other hand, if Aug is revised upwards and we continue to see strong job growth thru the end of the year than expect rates to continue to climb up. Once again we are at the mercy of the monthly employment reports. Stay glued.