Weekly Economic Summary
Wednesday, February 22nd

Conforming and Jumbo rates for 30 Year Fixed Rate Mortgages have continued their consolidation pattern in the first month of 2017. It appears that rates have started to begin to improve falling to 4.15% for conforming loans and 4.26% for jumbo loans.

You can take advantage of this period of stability by preparing to be ready for any forthcoming rate improvement by watching real-time rates on Erate's Website using our Rate search tool, understanding your specific Loan Scenario, and calling me for a current tailored rate quote with closing costs. Once the details of your Rate Quote & Loan Closing Costs make sense for you to proceed you will need to complete the On-Line Long Form Application from the link at the top of our home page and I will download it and get back to you over the phone to go over it with you. Your credit score will not be checked at Erate, until you give the go ahead later on. Meanwhile, having started this process now you will be in a position to take advantage quickly of still low historic mortgage interest rates.

On Wednesday, the Federal Reserve Board will release its minutes from the December Committee meeting and we will see their deliberations about how the individual members voted and the issues impacting the pace of Fed tightening over the coming months. The odds for interest rate increase at the March Federal Open-Market Committee meeting have been relatively stable for the past several weeks at 36%.

The probability for a March rate hike is expected to rise to 50% or more as we move closer to the date of the next FOMC meeting. Here are the five key areas that The Wall Street Journal thinks are most critical...

A March Signal
Since the meeting, Fed officials have sounded increasingly comfortable about raising rates, perhaps as soon as the next gathering, on March 14-15. Philadelphia Fed President Patrick Harker said a move in March is possible, and Dallas Fed chief Robert Kaplan said rates should rise "sooner rather than later." Chairwoman Janet Yellen said last week the Fed would consider raising rates "at our upcoming meetings," a phrase that left open the possibility of a March move without committing to one. The minutes could offer a better sense about policy makers' readiness to raise rates next month.

Balance Sheet Blues
What to do about the Fed's roughly $4.5 trillion portfolio of assets, or balance sheet, has become one of the year's biggest questions. Some officials have hinted at a willingness to begin shrinking the balance sheet in the near future, but the February meeting statement didn't address the topic. Speaking before Congress last week, Ms. Yellen said she was unwilling to use the balance sheet as a monetary policy tool, a contrast with some ideas floated by some of her colleagues. The minutes could shed light on the internal debate among officials about the future of the Fed's portfolio.

Fiscal Policy
The meeting statement made no mention of the economic and monetary consequences of the Trump administration other than a nod to improving consumer and business sentiment readings. Minutes from the Fed's December meeting indicated officials were split over how to incorporate possible fiscal policy changes into their forecasts. The minutes to be released Wednesday could show whether officials have come to some sort of consensus over how to factor possible tax and spending changes into their monetary policy decision-making.

Is Inflation for Real?
Inflation, measured by the Fed's preferred personal-consumption expenditures price index, has been rising, moving up by 1.6% on the year in December. But it is unclear how much of that increase reflects a short-lived bump from the uptick in oil prices and how much of it is due to underlying strength in the economy. The minutes could help us understand how Fed officials are interpreting recent inflation numbers.

Lurking Dangers
The economy's recent strong patch and talk about the Trump administration's fiscal priorities–such as tax cuts and spending boosts–have bred speculation that the economy could perform better than expected this year. But that doesn't mean there aren't threats still abroad. Although the Chinese economy seems more stable than it did this time last year, it still is grappling with a credit boom. And the eurozone could see new waves of volatility as Greece launches another round of debt negotiations. Do Fed officials see any lurking dangers on the international scene? The latest statement didn't say, but the minutes might.

While every nuance will be scoured for insight, we leave readers with the following chart to show just how crucial a decision on the Fed's balance sheet is becoming - as almost $1 trillion matures in the next two years...

As Bloomberg notes, policy-makers have expressed a preference for passive unwinding over outright asset sales, but details remain sparse. Analysts will look to the minutes for clarity regarding whether officials intend to simply cease reinvestment for all asset classes or whether they will try to modulate the liquidation in a more controlled fashion. Additionally, analysts will attempt to decipher how much interest-rate buffer policy makers want to have in place before initiating the passive liquidation. An important question at this point is: Is this a pivotal moment of Normalization? or Can the QE baton be passed to another CB one last time? Or are the entire world's Central Banks' maxed out with debt as it increasingly appears to be. Mortgage rates are still near historical lows in interest rates and time is of the essence for you to refinance or get your purchase loan.

Weekly Mortgage Rates Analysis

We do not know the future, but this period of super-low interest rates and unprecedented monetary policy moves may be coming to an end and "normalization" of the yield curve may be at hand. This would be a good time to get prepared to lock in your Rates!!!