At the time I am writing this mortgage interest rates are almost 1/4th of a percent higher than they were last Friday.

This was a short week again as Tuesday was New Year's Day. Our leaders in Washington waited till the last possible minute, but were able to come to an agreement to avoid going over the Fiscal Cliff and taxes increasing for a majority of Americans. Unfortunately the deal failed to deal with many other import issues that were on the table such as spending cuts and entitlement reform. These issues will have to be dealt with later this year. Rates increased slightly when the deal was announced, but not as much as many expected since the deal failed to address many important issues.

Yesterday the minutes of the Federal Reserve's(FED) last meeting was released and rocked the market. The minutes showed that there is disagreement among the FED members on when to stop quantitative easing (QE). QE is the process of artificially lowering interest rates by buying long term securities such as mortgage bonds. Most investors thought the FED would continue QE into mid-2014, but the minutes showed that some members wanted to stop at the end of 2013. Interest rates saw a big spike on the news.

Next on the table in Washington is the debt ceiling. You may remember the debt ceiling debates from last year, well the same problem is back again. Our country has once again run out of money and we are running on emergency funds. The debt ceiling sets a maximum amount of debt that we as a country allow ourselves to borrow and we have reached that limit. We can no longer borrow more money to continue spending it until the debt ceiling has been raised or we pay down some of our debt. Since our government is currently spending a lot more than it takes in, paying down the debt is not an option. Current estimates are that the government will be completely out of money in early March unless something is done. Once again the 2 parties leading our country are disagreeing on how to solve the problem. We can expect a great deal of uncertainty and market volatility leading up to the dead line.