As has been the case for the past several weeks – economic news may cause a temporary little flutter in the mortgage market – but any substantial shift in the current trend trajectory of mortgage interest rates will almost certainly be tied to events surrounding political action – or lack thereof – with regard to the looming “fiscal cliff”.

Members of Congress are increasingly looking at the period immediately after the December 31st “fiscal cliff” deadline as the time-frame when a retroactive “fix” to avoid steep tax hikes and sharp spending cuts will begin to take shape. There is no sign of urgency to do anything until the new Congress is seated.

The President has called Congressional leaders to the White House this afternoon at 3:00 p.m. ET — but the general belief among traders is this afternoon’s meeting will amount to nothing more than political theater.

The probabilities are high the hours between now and the stroke of midnight on December 31st will not be filled with intense negotiations to resolve the current fiscal crisis – but rather round after round of media appearances by “talking heads” from each party attempting to blame the other for failing to make the concessions necessary to avert pushing the American people and their economy over the edge of the “fiscal cliff.”

As long as this condition persist – the stock markets will likely experience a ramping up of selling pressure – a process sure to add support to the prospects for steady to perhaps fractionally lower mortgage interest rates.

Looking ahead to next week – the mortgage market will close early at 2:00 p.m. ET on Monday for the New Year’s Day Holiday. Wednesday’s Institute of Supply Management’s December Manufacturing Index and Friday’s December Nonfarm Payroll Report will bookend an otherwise quiet week of economic news. Both reports are expected to show the economy is churning along at a very modest growth rate – well below levels that might otherwise exert substantial upward pressure on mortgage interest rates.


Mortgage Rates as of December 28, 2012 ( purchase transactions )

30 day rate locks, subject to credit score and loan to value edits


30 year fixed                  3.00%


30 year fixed rate           3.25%    (*LTV and credit score could impact this quote)  ( .50 origination fee, 760+ score)

15 year fixed rate           2.75%

5/1 ARM                        2.375%

7/1 ARM                        2.75%

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