Mortgage Rate Update February 16, 2016

Mortgage rates have worsened since last Thursday’s ‘rate update’.

After touching multi-year lows on Thursday of last week the US 10-year treasury yield has bounced higher by nearly .25% and 30-year fixed rate mortgage terms have followed suit.

Why have rates risen so acutely?  Yields had been driven lower thanks to a “flight-to-safety” which had been underway since the beginning of the year.  Fears over China’s economy, Europe’s stability, and oil prices had driven investors into perceived “safe-havens” which is the primary reason why rates have been pushed to historically low levels.

Will this pattern continue?  At least in the immediate term it looks like sentiment has changed.  From a technical perspective we’ll be watching to see if rates drift further away from the recent trading range.  Or, do they get pulled back into the recent trading range?

Looking at the economic calendar for this holiday shortened week inflation gauges highlight the week.  On Wednesday we get the Producer Price Index and on Friday we get a peek at the Consumer Price Index.  It is my view that as long as inflationary pressure remains muted in our economy that mortgage rates will remain low.

Given that momentum has shifted I am going to recommend locking.

Current Outlook: locking