Mortgage Rate Update May 26, 2015

Mortgage rates are unchanged from late last week.

It’s a busy Tuesday morning in the financial markets.  With the week shortened by Memorial Day the economic calendar is dense.

In case you missed it Standard & Poor’s (S&P) released its latest version of the Case-Shiller Home Price Index.  The report showed continued home price appreciation across the country.  Here in Portland home prices increased by approximately 7% on a year-over-year basis.  Asked as to whether or not consumers should fear a “bubble” in housing S&P managing director David Blitzer commented, “I would describe this as a rebound in home prices, not bubble and not a reason to be fearful.”

According to the Commerce Department sales of new homes rose by more than expected in April.  Lastly, the Federal Housing Finance Agency (FHFA) released their latest reading on home prices.  It showed that home prices rose by 5.0% in a year-over-year basis ending in March.  The FHFA index uses purchase-only transactions that are financed by Fannie Mae or Freddie Mac secured loans.

From a technical perspective conditions in the mortgage-backed bond (MBS) market look concerning.  The MBS trading range has converged over the past 10 days and are headed for a single point.  When we see this pattern we grow concerned about a “break-out” which is when prices move sharply higher or lower.  We will need to keep a close eye on things over the next couple days.

Current Outlook: safe play is to lock