Mortgage Rate Update April 27, 2015

Mortgage rates have effectively remain unchanged for the entire month of April.  I cannot recall a period as long as this where rates have remained so stable for so long.  The economic calendar is busy this week so I would not be surprised if we see rates for better or worse.

Looking ahead for the week Standard & Poors will release the monthly Case-Shiller home price index tomorrow.  On Wednesday we’ll get a reading on the US Gross Domestic Product and the Fed will release its latest monetary policy statement following their regularly scheduled meeting.  We continue to believe that the Fed will not raise short-term interest rates at this meeting but may offer clues as to when that first hike will take place.  On Thursday we’ll see readings on personal income/ spending and the Fed’s favorite gauge of inflation known as “PCE”.

Mortgage rates remain near historical lows despite US stocks continuing to rally (generally speaking when stocks rise it puts upward pressure on interest rates).  The S&P 500 is currently trading at ~2,120.  On March 2009 it traded @ 675 which means the S&P 500 has earned an 18.91% annualized return (not including dividends) since then.  Can stocks continue on at this pace?  No knows for certain but I am skeptical of current valuations in the US stock market.

From a technical perspective mortgage-backed bonds are currently trading at an important layer of support.  We need to see prices hold for rates to remain at these levels.  The safe play is to lock but based on the last month there may be moderately better pricing later in the week.

Current Outlook: floating