Fed Minutes Pressure Mortgage Rates

Mortgage rates ticked higher yesterday on the release of the Federal Reserve’s minutes from the August 10 meeting.

Released three weeks after the Federal Open Market Committee meeting, this is the lengthy recap of what exactly transpired during the last FOMC meeting that didn’t make it into the brief post-meeting press release.  Weighing in a just under 6,200 words, the minutes are a pretty direct look into the Fed’s internal conversations that shape our nation’s monetary policy.

Yesterday’s look didn’t reveal an optimistic Fed by any stretch, but Wall Street rejoiced that the Fed wasn’t more pessimistic.

The observations aren’t news by any stretch:

• Deep thoughts on the Economy:   The recession was deeper than previously thought
• Deep thoughts on Jobs:   Private employment is expanding slowly
• Deep thoughts on Housing:  The market was “quite soft” in June

There is absolutely nothing that the Fed highlighted that resembled new news, let alone “good” news.  Still mortgage rates jumped higher because the Fed wasn’t as harsh as Wall Street was expecting.

So, largely based on the adjectives chosen by the Fed, mortgage rates moved higher.

Our weekly interest rate predictions forecast volatility and all signs are that we are in for a choppy few days between now and the holiday weekend.  If up’s and down’s aren’t your style, consider locking in.  There is no pressing threat to make mortgage rates jump 2% overnight, but it looks like we’re moving into a phase in the rate rally that might go back to regular 0.125-0.250% daily loan rate fluctuations.