The Federal Reserve held its last two-day meetings for the year this week and ended yesterday with brief comments. Mindful of the way oil has been behaving lately and sluggish markets around the globe, Wall Street got what it wanted to hear—the Fed will be “patient” as it relates to interest rates. About every six weeks, the Federal Open Market Committee meets to discuss various aspects of the economy including factors that influence how the FOMC treats interest rates. Yesterday’s announcement was just what the markets wanted to hear and clocked one of its best single day gains of the year.
At the same time, the benchmark FNMA 3.50% coupon reacted mildly, given the extensive gains in both the Dow as well as the S&P 500 and NASDAQ. The 30 year mortgage rate barely moved throughout the day and is still near their December lows. It’s probably too late to lock in any rate if you’re closing this month on a purchase or refinance, as the weekends and upcoming holidays will take away six of the remaining 13 calendar days. However, if you’re closing sometime in January for a VA purchase or a VA streamline refinance, in all likelihood the VA 30 year rate will still be below the 4.00% mark.
Remember the strong unemployment numbers for November? While the rate remained unchanged at 5.8%, there were 321,000 new non-farm payroll jobs added. That’s a respectable number and if December shows similar numbers, to be released Friday, January 9 of next year, you can expect rates to pop above the 4.00% level. Similar strength in other reports and the Fed’s “patience” just might begin to wear a little thin.