WeeklyBasis 01/26/04: Fed Meeting This Week, Expect No Change

Rates/commentary for the week of January 26, 2004. Rates opened near all-time lows Monday, then rose about .125% as investors sold bonds (which pushes yields up) to fuel a stock rally on positive earnings news. As earnings continue to pour in this week, we may see more of the same. In addition to earnings, the markets will also be digesting lots of economic data. The Fed’s first rate policy meeting of 2004 is Tue/Wed. They are expected to leave rates unchanged. Another key report affecting rates this week is 4th quarter GDP (released Friday). This should pale in comparison to the blistering 3rd quarter GDP growth rate, and keep the Fed from getting too nervous about inflation. Great news for housing: Existing Home Sales for December (released today) set a new record. Freddie Mac estimates that almost one in eleven homes were sold in 2003, and nearly one-half of single-family mortgage debt outstanding was originated last year. With prospects for inflation remaining benign, mortgage rates should generally remain low for the coming months. But this week, we will certainly see rates bounce around in volatile trading.

Conforming ($50K – $333,700K) – NO POINTS
30 Year: 5.375% (5.515% APR)
15 Year: 4.875% (5.015% APR)
5/1 ARM: 4.625% (4.775% APR)

Jumbo ($333,701 – $650,000) – NO POINTS
30 Year: 5.875% (6.015% APR)
15 Year: 5.25% (5.39% APR)
5/1 ARM: 4.625% (4.775% APR)