We started August with a prediction: We didn’t expect to see much movement in mortgage rates for much of the month.  So far, our soothsaying has proved accurate, and even more accurate than we expected.

Mortgage rates continue to hold a narrow range. In fact, Mortgage News Daily reports that there are no historical examples of rates holding as steady and as narrow as they have held in August. Rates are about as narrow and as steady as they’ve ever been.

Of course, that could all change next Friday, if the employment numbers for August are as strong as those in July (which saw a 255,000 increase in payrolls.)  The Federal Reserve could be as motivated as it has been all year to finally move on interest rates.

But then again, maybe not. Global economic growth remains an overarching concern.

According to the International Monetary Fund's (IMF) latest World Economic Outlook released in July, advanced economies will grow only 1.8% in 2016 and 2017, down 0.1% and 0.2% separately from the IMF’s April forecasts. Lack of meaningful growth means central banks around the world will continue to pump more money into their respective economies, which they do by buying government bonds with newly created money. All this money pumping and bond buying has swelled the value of negative-yield bonds to $13.4 trillion.

Federal Reserve officials meet again on Sept. 21. Traders in federal funds rate futures contracts are betting with an 18% chance of a rate increase. (We think the odds should be lower.)  The strongest odds for a rate increase don’t occur until the Fed’s December meeting, which is when the Fed last raised rates. The odds for an increase in December rise to 49%.

In short, we wouldn’t be surprised if this narrow range for mortgage rates persists deep into September.  

 Information provided by Jessica Regan.

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