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Rate Update

Election news and the Fed dominated economic headlines last week as the stock market rallied to its highest close since the week of Lehman Brothers Holdings Inc.’s bankruptcy in 2008 and mortgage rates improved. On Tuesday, Republicans retook the House of Representatives with a gain of at least 60 seats, their biggest increase since 1938. It is widely assumed the party will use its first majority in the House since 2006 to try to curb regulations and government spending. On Wednesday, the Federal Reserve, to no one’s surprise, left the benchmark lending rate unchanged at between zero and 0.250%. The Fed also announced they will buy an extra $600 billion of Treasury bonds by next June, following the unprecedented $1.250 billion mortgage-backed securities purchased in the last year and a half. Their hope is that the move will make it cheaper to borrow money, take out mortgages or refinance houses, and for businesses to borrow funds in order to expand. Higher inflation and lower unemployment seems to be the goal. In other news, Pending Home Sales in the US unexpectedly fell 1.8% in September, the first decline in three months and a 24.9% drop from one year ago. Also, Non-Farm Payrolls were up 151,000, doubling most expectations, and the Unemployment Rate remained at 9.6% for a third consecutive month. Currently, the 30 Year Fixed is 3.875% (4.017% APR) and the 15 Year Fixed is 3.250% (3.444% APR).

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