There was no real surprise all week long. With all economic data reports coming in as expected and no surprises in the Fed Minutes. With that the market took a snooze. No major changes from a week ago.
The primary message that investors received from the highly anticipated Minutes from the January 30 Fed meeting was that Fed officials remain divided on the outlook for the Fed's MBS and Treasury purchase program. The Fed's current position is that the program will continue until substantial improvement in the labor market takes place, specifically until the Unemployment Rate declines to 6.5%, as long as inflation remains below 2.5%. According to the Minutes, concern about the costs and the risks of the program appears to be growing, causing some officials to suggest that the program may end before the labor market goals are reached. The Minutes left investors more uncertain about future Fed policy. That uncertainty is why I think we continue to see a slight bias towards higher rates even without and change in fundamentals.
Mortgage rates are marginally higher on the week.
The 10-year US Treasury Note is at 1.97%, down .04 since last time.
Credit Spread (10yr UST vs. FNMA Current Coupon) 1.22, compares to 1.17 last time.
Current 30-year Fixed 3.50%. Jumbo 5/1 ARM 2. 50%.
Of note, the conforming 5/1 ARM is now at 2.25%, the 7/1 at 2.625%.
If you have any questions about 203K loans or other mortgage products, or need help with a pre-approval, I am always happy to be of service.