Mortgage Rate Update April 17, 2014

Mortgage rates are unchanged from earlier in the week although mortgage-backed bond prices are trending lower so we have to be careful.

Mortgage rates are unchanged this week but its not because of a lack of news.  Instead mortgage rates are being pulled in opposite directions by two different story-lines.

If the US economy were the only factor driving mortgage rates I’d expect them to be rising.  For a second straight week new filings for unemployment claims remained at per-recession levels.  This may be a signal that the labor market is continuing to normalize.  Good news for the economy is often bad news for mortgage rates.

Earlier this week the Labor Department released the latest reading of the Consumer Price Index (CPI).  The data showed that prices at the retail level of the US economy grew at a faster clip than was anticipated.  Traditionally, inflation is the primary driver of interest rates so this news was unfriendly.

So why haven’t rates risen given the aforementioned news?  Ongoing uncertainty between Ukraine and Russia has tempered the markets.  Overnight clashes in eastern Ukraine took 3 lives and injured more.  The threat of escalating geopolitical tension is helping mortgage rates remain low.

As we head into the Easter weekend the bond market will close early today and be closed all day tomorrow.  I will maintain a locking bias.

Current Outlook: locking