Mortgage rates continued their sub-4.00% trend winding out the end of October, this according to Freddie Mac’s weekly mortgage survey. The 30 year rate rose from 3.92% to 3.98% while the 15 year average rose to 3.13% from 3.08%.
It was quite a month, especially the last week in October. The Fed finished up their next round of two-day meetings last week, ending Wednesday. It’s typical for Fed comments to be made at the conclusion of these meetings and for the previous few weeks the tone was a bit more accommodative. So much so that one comment made by a Fed Board member helped stop a stock market free fall. At least that’s what many investors are thinking. As the Dow was logging in triple digit losses, a simple announcement that the Fed would be at the ready to shore up markets eased the nerves. What they might do exactly is not really known but what was said seemed to work as the Dow finished the week above 17000 once again.
Yet last Wednesday, it appeared the Fed was taking on a more aggressive approach stating the employment situation is continuing to improve and investors interpreted that and other comments as an indication rates will go up sooner rather than later. The infamous QE3 program’s demise was confirmed as well but so far that hasn’t hurt the credit markets at all as mortgage rates continue to meander in their relative low range.
Rate Movers This Week
We’ve got several economic reports out this week, none more important than Friday’s unemployment report for October as well job creation. Investors are predicting 275,000 new jobs created for the month which would add to the concerns regarding rate increases early next year.
The unemployment rate may also go up a bit as more people are getting back in the work force. Doing so adds to the pool of potential workers which will cause the unemployment rate to rise. As such, mortgage rates will be paying less attention to the actual unemployment rate and more so to the number of new jobs created.
If more the report shows more jobs than expected, rates could rise. A recovering economy causes investors to put their money in riskier assets like stocks, causing demand for mortgage bonds to fall.