Mortgage Rates Hold Steady Despite Upbeat Fed

January 31, 2018

Mortgage rates managed to hold steady today, on average (some lenders were slightly better while others were slightly worse) despite a more upbeat economic assessment from The Federal Reserve.  The Fed releases a statement on monetary policy 8 times a year.  These statements let markets know what the Fed is thinking and how it is planning on approaching policy in the future.  They also serve as venues to announce changes in the Fed’s policy rate, the “Fed Funds Rate,” which has a bearing on almost all other rates (including mortgages).

The Fed wasn’t expected to hike rates with today’s statement, and this wasn’t one of the 4 meetings a year where they release updated forecasts.  That meant markets were left to glean any actionable info from the verbiage of the statement.  Despite some anxiety in the marketplace about the Fed potentially making bigger changes to its guidance, the actual statement was reasonably close to the previous version.  The only potential hang-ups were a few tweaks that gave more credit to recent economic strength and improvements in the inflation outlook.

A stronger inflation outlook is bad for bonds and interest rates, all other things being equal.  But today’s statement didn’t do any new damage to the already gloomy rate situation.  That’s because market participants didn’t hear anything from the Fed that wasn’t already clearly understood.  In other words, the Fed essentially re-stated what was already obvious.  Rates have been moving for other reasons recently, and those motivations supersede minor course corrections from the Fed.

The broader trend in rates remains negative.  It has been and will continue to be the case that we need to see a much bigger and longer-lasting bounce in rates before we can entertain anything else.  Needless to say, floating and hoping for a bounce is not the right strategy at the moment, even though it will end up looking like a good idea in hindsight one of these days.

Today’s Most Prevalent Rates

Best Execution
Rate Change
30 Yr FRM 4.34% -0.01
15 Yr FRM 3.71% +0.00
FHA 30 Year Fixed 4.10% +0.00
Jumbo 30 Year Fixed 4.44% -0.01