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Rate Update

Fed rumors and weak employment and housing data led mortgage rates lower. The Unemployment Rate held steady at 9.5% in July, while the government’s broader measure of “underemployment” was also unchanged at 16.5%. The economy lost 131,000 jobs in July. This included the loss of 143,000 census positions. Private employers added a modest 71,000 jobs, although below analyst expectations. Pending Home Sales fell 2.6% in June, following a 30% drop in May. Currently, the 30-Year Fixed is at 4.125% (4.246% APR) and the 15-Year Fixed is at 3.750% (3.796% APR). This is a light news week, highlighted by the Fed meeting tomorrow. There is the possibility of a Fed policy change, as officials are reportedly considering the purchase of additional mortgage-backed securities (MBS) to replace maturing securities. Due to defaults and refinancings, some of the Fed’s $1.25 trillion MBS mature every month. Until recently, investors expected the Fed to let its portfolio slowly shrink in this fashion. Tuesday, though, a Wall Street Journal article suggested that officials are considering a plan to replace those securities with new purchases to further stimulate the economy.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile