Mortgage Rate Update July 17, 2014

Although mortgage note rates are unchanged this morning the associated closing costs are slightly worse so in fact locking at the beginning of the week was the correct call.  Overall, mortgage rates have remained fairly stable dating back to the 4th of July holiday.

The Census Bureau released data this morning which showed that new housing starts and building permits were down last month.  This is unwelcome news for a housing market where inventories remain tight.  It is also bad news for stocks but good news for interest rates.

Fed Chairwoman Janet Yellen told Congressional leaders yesterday that the Fed intends on maintaining an accommodative stance with regard to short-term interest rates.  In her prepared testimony she also shared that the Fed considers the current valuations on some junk bonds and stocks “stretched”.  There is more and more talk that the stock market is overdue for a correction.  If stocks do reverse lower then we’d expect mortgage rates to remain relatively low.

From a technical perspective we’re watching the US 10-year treasury yield to see if it can break below 2.50%.  If so, we may see mortgage rates improve by ~.125% which would match recent lows.  For now we’ll float but if the yield on the 10-year treasury reverses higher I will shift back to locking.

Current Outlook: floating