Mortgage Rate Update June 1, 2015

Mortgage rates are unchanged from late last week.

The technical pattern for mortgage-backed bonds (MBS’s) which I identified as a positive sign for mortgage rates last Thursday is breaking down this morning.  MBS prices are drifting below the supportive trend line which does not bode well for mortgage rates.

What is putting pressure on interest rates?  Greece announced earlier today that they would be on time with their next interest payment due to the International Monetary Fund.  The ailing country is scheduled to repay €1.6 billion over the next couple weeks.  Assuming they make all payments it would likely put upward pressure on mortgage rates.

The economic calendar is jam packed with significant information this week.   Earlier today the Commerce Department released its monthly personal spending report.  It showed that despite lower gasoline prices US consumers remain cautious.  This is not terribly surprising given that we got soft consumer confidence figures last week.

Also embedded in the report is the Fed’s favorite gauge of inflation known as the Personal Consumption Expenditure Price Index.  It showed that inflation continues to be below 2% which will prevent the Fed from hiking short-term rates soon.  Later this week we get the latest jobs report.

Given that the positive technical trading patterns have broken down I am inclined to recommend locking.

Current Outlook: locking