Mortgage Rate Update February 17, 2015

Although mortgage note rates are mostly unchanged this morning the accompanying closing costs are slightly worse.

Last Thursday I highlighted the importance of the US 10-year treasury sticking at or below the important technical level of 2.02%.  Unfortunately the yield on the 10-year has pierced above that layer and is currently trading at 2.09%.  Should we close above 2.02% I would expect the yield to rise as high as 2.17%-2.22% before having an opportunity to improve.  This means mortgage rates may get .125%-.25% worse before they get better.

However, should yields reverse and close at or below 2.02% this would be a great sign for mortgage rates.

Over the weekend talks broke down between Greece and the European Union (EU).  Greece is in need of an extension to their bailout package and EU leaders insist on enforcing austerity measures and economic reforms while Greece is hopeful to renegotiate the terms.  The markets appear to have confidence that some agreement will obtained possibly at the last minute.  Should sentiment change we’d expect that to benefit mortgage rates.

The economic calendar gets busy tomorrow with readings on housing starts, building permits, Fed meeting minutes, and inflation at the wholesale level of the economy.  US economic data has weakened modestly over the past week but mortgage rates have not reacted as we would expect.

For those who have the stomach of volatility I would recommend floating to see if the US 10-year can float back down towards 2.02% by the end of the day.  If so, continue to float.  If not, time to lock.

Current Outlook: floating