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By G. Steven Bray
Mortgage rates seem very content with their current lot in life. They’ve been hanging out in the same range, around 4% for a 30-year fixed mortgage, for the last couple months, and that really doesn’t seem likely to change soon.
The next big economic event that could move rates is the Federal Reserve meeting next week. The Fed indicated at its Sep meeting that it could raise short term rates in Oct, but pretty much no one believes that. US and global economic data has deteriorated since the meeting, and the Fed hardly wants to risk being blamed for the next recession.
Even if the Fed doesn’t raise rates, its post meeting statement could cause a stir. Speeches by the Fed governors since Sep have seemed contradictory. In the unlikely event the statement clarifies the Fed’s position on the timing of rate increases, I suspect rates will move. I think the risk is greater that rates will move up than down. Markets seem disinclined to push rates lower at this time, so even if the Fed takes rate hikes off the table for months, rates may remain in their current range. Alternatively, if the statement stresses the Fed’s determination to raise rates this year, look for rates to jump, at least temporarily.