Aug 20 2014, 4:36PM
Mortgage rates were higher for a third straight day as financial markets continue a measured correction from last Friday’s volatility. At that time, headlines concerning Ukraine destroying a Russian armored convoy caused rates to move to their lowest levels in more than 2 months. Since then, it’s been a steady march back in the other direction.
Of the week’s limited scheduled events, most haven’t had any objection to a moderate move higher in rates. Today’s release of the Minutes from the most recent Fed Meeting was no exception. In general, most analysts felt the details from the Fed meeting were slightly more upbeat than suggested by the Fed’s official policy announcement on July 30th.
A more optimistic Fed is bad for rates as it implies an earlier potential rate hike and removal of other forms of accommodation. While the Fed seems to be in favor of leaving their portfolio of Mortgage-Backed-Securities (MBS) intact, they do plan on reducing their Treasury holdings after the first rate hike. This suggests upward pressure on Treasury yields, and MBS, which dictate mortgage rates, are heavily influenced by Treasuries.
The initial reaction to the Fed Minutes at 2pm prompted several lenders to revise rate sheets higher though not all lenders repriced. It wasn’t enough of an increase to unseat 4.125% as the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios. Many borrowers will still see the same rates today vs yesterday with the movement coming in the form of increased closing costs.