Mortgage rates dip amid political uncertainty

Graph shows the rise and fall of mortgage interest rates over the past year.

Over the past two months, interest rates have been slipping downward following a sharp spike in rates after the U.S. election last fall. Some factors at play include the lessening likelihood of Congress passing any tax reform or deregulatory laws by the end of the year, as well as conflicts abroad involving Qatar.

The May jobs report released last week showed less impressive numbers, with a lower than expected 138,000 new jobs added. The number of jobs for March and April also were both adjusted lower than previously announced. Weaker employment numbers put downward pressure on interest rates - a positive for borrowers taking on new credit.

The Fed is holding another meeting next week but is still expected to raise the central interest rate regardless of lower job figures. Fed officials have stated that a couple more rate hikes are likely on the table in 2017, barring any drastic developments. Because the markets have been anticipating a rate hike, it will probably have minimal effect on mortgage interest rates.

Dodd-Frank to be repealed?

While former FBI director James Comey testified before the Senate on Thursday, the House passed a bill to remove much of financial regulation enacted in the Dodd-Frank act. Dodd-Frank was put in place after the economic collapse of 2008 to tighten lending standards and penalize financial institutions taking advantage of consumers with predatory schemes. Backers of the House's bill, called the Financial Choice Act, argue that lending standards have gotten too strict and are hampering growth.

The Financial Choice Act passed the House of Representatives largely on party lines but is not expected to make it through the Senate as proposed. Stay tuned to see what happens.