Home Loan Rates

Despite the fact that the Coronavirus continues to spread mortgage rates appear to have hit an inflection point and are moving slightly higher.

Virus in China

According to reports there are now over 20,000 confirmed cases of the deadly Coronavirus (twice as many as this time last week).  The disease continues to pop up across the globe but is primarily concentrated in China.

Home Loan rates have touched multi-years lows as fear has spread into the financial markets encouraging investors to seek “safe-havens” including the US fixed income markets.  The additional demand has driven interest rates lower.

Stock Market

US stocks are rallying today as investors bet on the long-term resilience of the global economy.  The Dow Jones Industrial Average is up over 1.5% (430 points) in early trading.  When stocks rally it tends to put upward pressure on interest rates.

The Fed

As expected the Fed left rates unchanged when they met last week and their monetary policy comments were mostly unchanged from their previous meeting.  At this point, I do not expect the Fed to hike or cut interest rates in 2020.  Of course, this does not mean that mortgage rates will remain flat because the Federal Funds Rate does not directly impact home loan rates.

The week ahead

The economic calendar heats up this week.  The most important release will come Friday when we get the all-important jobs report.  Analysts are currently expecting 165,000 new jobs to be reported for January.  There are also a couple Fed officials giving speeches throughout the week.

From a technical perspective it appears that interest rates may have bottomed out on Friday of last week and will start trending higher.  I will shift to a locking bias but if the spread of the Coronavirus accelerates then rates will likely dip again.

Current Outlook: locking