Mortgage Rate Update December 30, 2013

Mortgage rates are basically unchanged from last Monday.

As we wrap up 2013 it looks like average 30-year fixed rate mortgages will end the year up by `1.125%.  If you follow ‘rate update’ on a regular basis then you know that mortgage rates tend to follow the yield on the US 10-year treasury note.  2013 demonstrated this relationship well as the yield on 10-year treasuries increased by ~1.22%.  Stay tuned as I will be posting predictions for 2014 soon.

In terms of housing the National Association of Realtors reported earlier that pending home sales grew by only .2% nationwide  in November.  Economists had been predicting a 1% increase.  The media will likely jump all over this and report a pessimistic outlook for the housing market next year.  However, in the western region pending home sales were up 1.8% so regionally the market continues to rebound.

The financial markets are still experiencing thin trading as many investment professionals remain out of the office.  This can lead to volatility so we need to be cautious.  Having said that the technical outlook looks positive for mortgage-backed bonds so I will remain in a floating position.

Current Outlook: near-term floating