Mortgage interest rates are steady to fractionally lower this morning on worries about protracted budget talks in Washington and growing military tensions between Israel and Palestine.

President Obama and ranking Democrats remain solidly entrenched in their position that a tax-hike on the wealthy is the first and most crucial step in reaching a budget deal and averting the so called “fiscal cliff”. For their part, top Republicans have indicated they have no intention of agreeing to an escalated tax on the wealthiest Americans. The battle lines in the war of political brinkmanship have been drawn once again and few market players expect a compromise between the Democrats and the Republicans any time soon. As long as this impasse prevails – a key pillar supporting the current prospects for steady to perhaps fractionally lower mortgage interest rates will remain firmly in place.

Trading action for the balance of the year will likely be headline driven rather than trend driven. Any signs the president and Congress have reached a viable and sustainable accord on deficit reductions and tax increases — and/or a major reduction in tensions in the Middle East is achieved — will tend to nudge mortgage interest rates higher. While each of these outcomes are individually and collectively possible between now and the end of the year – it is difficult to see how it will happen.

In other news, Fed Chairman Ben Bernanke spoke on the housing & mortgage markets yesterday and stated that mortgage lending standards are “overly tight” and that these guidelines are restricting credit worthy borrowers from purchasing homes. We went on to further state that the lax lending standards from 2004 to 2007 have now swung too far the other direction and are having an adverse impact on the housing recovery. Some relaxation of mortgage guidelines would likely help the housing market.

Looking ahead to next week’s holiday shortened trading session Monday’s Existing Home Sales report will occupy the primary spot on an otherwise very thin economic calendar. The mortgage market will be closed on Thursday for the Thanksgiving Holiday and it also will close early at 2:00 p.m. ET on Friday.

Mortgage Rates as of November 16, 2012 ( purchase transactions )

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


30 year fixed 3.25% 0% 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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