Mortgage Rates Rise on Brexit and Trade News, But Gains Could Be Short-Lived

Mortgage rates rose to three-month highs this week on encouraging geopolitical developments, but will likely be drawn back after the Federal Reserve’s third rate cut of 2019.

Even with a substantial dose of economic data and news over the past seven days, geopolitical developments once again had the greatest impact on rates. Easing concerns surrounding Brexit and the U.S.-China trade tensions, the two major geopolitical stories of the past year, pushed mortgage rates higher on Monday.

But this upward momentum will likely be curtailed after the Federal Reserve announced a third cut to the federal funds rate this year. As usual, bond yields reacted less to the announcement and more to the statement that followed in which Chairman Jerome Powell stated that it would take a significant uptick in inflation before the Fed would consider future rate hikes. Bond yields reacted by turning downward and mortgage rates are likely to follow suit in the coming days. Looking ahead, more blockbuster economic data releases are due in the coming week, most notably Friday’s November jobs report, suggesting that more mortgage rate movements are on the way.

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