The clock is ticking and the battle lines are being drawn. The “fiscal cliff” fast approaching.

President Obama and Speaker Boehner will be engaged in efforts to prevent the economy from going over the “fiscal cliff” of steep government spending cuts and tax increases due to be implemented under existing law at the stroke of midnight on December 31st. Both gave speeches today.President Obama says he will veto any bill that extends tax cuts for $250K+ earners and Boehner countered with a report from Ernst & Young that raising top tax rates would destroy nearly 700,000 jobs in the United States. Resolution may come down to the deadline on December 31st.

The non-partisan Congressional Budget Office continues to reiterate its warning that if left unresolved, the abrupt fiscal tightening will knock the economy back into a recession, with employment rates likely to soar back to 9.0% or so.  From a mortgage interest rate perspective the good news is that another slump in the economy will almost certainly prove supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates – the bad news is that the plunge in job creation and the related negative impact on consumer confidence will make ready, willing and able borrowers increasingly hard to find.

Should investors begin to sniff the possibility of a political compromise with enough merit to avoid economic calamity — we will likely see a shift in the dynamics supporting mortgage interest rates at modern day lows.  Until/unless such an event occurs — mortgage interest rates are unlikely to make an extended move toward higher levels.

Looking ahead to the coming holiday shortened week the release of the October Retail Sales and October Producer Price Index on Wednesday followed by the Thursday morning release of the October Consumer Price Index will serve as the center piece of an otherwise quiet period for economic news.  All three mid-week reports are broadly expected to be mortgage interest rate neutral.


Mortgage Rates as of November 9, 2012 ( purchase transactions )

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


30 year fixed                  3.00%   .50% origination fee


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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