The Fed minutes were released today, and at first it seemed that there would be some more volatility in mortgage markets, as the headlines mentioned moving the cut off for the taper to October from December. However, a hidden gem in these FOMC minutes caused a small rally in mortgage rates instead.
The same article further explains, "Last year, the party line was that reinvestments would stop before the rate hike. A few Fed speakers grew more vocal this year in saying the Fed shouldn't be so quick to end reinvestments. The discussion was important enough to markets that it was the most likely market-mover at the last FOMC Minutes release as well, but in the opposite direction (because markets were expecting to see a more thorough discussion--much like today's). When that discussion instead came today, we got the rally that was priced-in back in May (seriously... it was the same 4+ basis point move then and now). Why is this reinvestment business so important? Quite simply because this will be the Fed's "bond buying" between the end of QE and whenever reinvestments cease. This is running at
Blue Home Loans explains that those who are trying to decide whether to lock or to float should consider that rates have gone down these last few days, albeit just slightly, and there is a chance this rally could continue. Because rates are still near the top of the range, there is room for them to get a bit lower before they start going back up again. For this reason, those who have the tolerance for the risk should consider floating, but should also keep a close eye on the markets and be ready to lock at a moments notice. Those with shorter lock periods might consider locking in today's home loan rates, because while they are at the top of the current range, they are still near the lowest levels of the year, and if rates go up even temporarily they risk missing out on this.
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Read the full story at http://www.prweb.com/releases/blue-home-loans/rate-gains-fomc-minutes/prweb12008418.htm
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