Mortgage:November 20, 2013

Economic events drive mortgage rates.
The month of November showcased how
events drive markets and cause mortgage
interest rates to fluctuate.

The employment report released on Nov. 8
showed job growth of 204,000 non-farm payroll
jobs created in October. This number was considerably
higher than the consensus estimates of
120,000. This good news on jobs was very bearish
for the bond market and mortgage rates.
On the heels of the employment report were
the confirmation hearings for Vice Chairman Janet
Yellen who has been nominated to replace
the current Federal Reserve Chairman Ben Bernanke.
Yellen?s remarks had the potential of
moving the markets. If confirmed, Yellen will be
the first female Chairperson of the Federal Reserve
Bank in its 100-year old history.

In her testimony Yellen stated that the quantitative
easing made a meaningful contribution
to economic growth. She went on to say that the
resulting ?lower interest rates have been instrumental?
for the growth in the housing sector.
Yellen addressed the labor participation rate
and the long-term unemployed. She said that
there should be special focus on employment and
didn?t argue when the point was raised that the
employment numbers may be potentially higher
due to the slack labor participation numbers.
Inflation goals are the same as outgoing Fed
Chairman Bernanke. It was reiterated that the
rate of inflation is well below the goal of a twopercent
inflation rate.

Yellen stated that the quantitate easing program
by the Fed cannot go on forever, but she
did not signal that the program was ending anytime
soon.

The markets liked Yellen?s testimony. After
Yellen?s testimony mortgage rates, there was a
collective sigh of relieve reflected in the markets
after her testimony. Yellen reaffirmed her reputation
as someone who has been supportive of
Bernanke?s rate and monitory policy.
Rates moderated from the higher levels
reached after the strong employment report.
Rates were basically back to October levels.
Jumbo money ? which can be used for loan
amounts north of $418,000 with 20-percent
down payments ? has been priced better than
comparable super conventional money.
Expect rates to keep in a relative narrow
range for the near term. Historically, mortgage
rates are in excellent shape.

Bill Starrels lives in Georgetown, where he works as a
mortgage loan officer. He can be reached at bill.starrels@
gmail.com or 703-625-7355. NMLS#485021