Mortgage Rate Update April 11, 2016

Mortgage rates remain very attractive.  The 30yr fixed rates available today are only +.25% off the all-time lows created in November 2012.

The big story in the financial markets this morning is the sudden increase to oil prices.  The price of a barrell is now trading above $40 and has increased by ~14% in the past week.   How may this impact mortgage rates?

Recently higher oil prices have also translated to higher stock prices and that is the case today.  The US markets are up ~.5%.  When stocks do well mortgage rates tend to suffer.  Furthermore, higher energy prices can eventually lead to inflationary pressure which we know is the nemesis of mortgage rates.

Looking ahead for the week the economic calendar is a little more active compared to last week.  There are two important inflation reports scheduled for release Wednesday and Thursday.  We’ll also see the latest retail sales report and consumer sentiment later in the week.

From a technical perspective mortgage rates appear to have stalled out after improving steadily since March 22nd.  Given that financial markets tend to operate in cycles I am growing concerned that mortgage rates may be poised to reverse and move higher.  Having said that the US 10-year treasury yield still has some room to the downside so it’s a tough call.

The safe play is to lock in with a long-term perspective that these rates are as good as we’ve seen throughout the past few decades.

Current Outlook: locking bias