Mortgage Rate Update July 14, 2016

On Monday I switched my outlook to a ‘locking bias’ and that adjustment appears to be timely.  Mortgage rates are priced modestly worse today compared to where we started the week albeit still very near all-time lows.

Like last week the US stock market continues to cruise.  The S&P 500 is trading at all-time highs as global investors pile into the US markets because many believe there is no where else around the world that looks attractive.

Unlike last week demand for US treasuries, which more directly impact mortgage rates, has waned.  Demand for “safe haven” investments has softened and as a result the yield on the US 10-year treasury has risen and mortgage rates have worsened slightly.

Overnight the Bank of England left short-term interest rates unchanged but signaled that they would likely employ additional monetary stimulus at their August meeting.  Assuming they do one would expect the US Dollar to further strengthen against the British pound which is great for traveling but not great for US exporting companies (like Nike and Intel).

Here in the US we saw the Producer Price Index increase at a faster pace than was anticipated last month.  It remains to be seen if this is a trend or a margin event but if it is the beginning of a trend then we would expect interest rates to be pressured higher.  We’ll need to keep a close eye moving forward.

The technical trading patterns suggest there is more to lose than to gain at this point.  I recommend locking in.

Current Outlook: locking