Mortgage Rate Update April 11, 2013

Mortgage rates are more or less unchanged from Monday.

It’s been a quiet week as far as financial news goes.  The improvement in rates that stemmed from last Friday’s weaker than expected jobs report is still available for borrowers.  How long will this last?

It’s difficult to say.  Our long-term outlook for 2013 has not changed.

 We still feel that mortgage rates will be higher in the second half of this year than they are now.  Bond giant Bill Gross, who is thought of as an expert on interest rates, has gone public with his positive outlook for US Treasury securities which means he doesn’t think rates will move significantly higher.  Having said that, most forecasters believe the US 10-year treasury yield will be ~.40% higher by year end.  Mortgage rates tend to follow the 10-year treasury yield.

In minutes released yesterday from the most recent Fed monetary policy meeting officials continue to debate how and when  to unwind quantitative easing.  The Fed will “take away the punch bowl” at some point and when they do it is highly unlikely mortgage rates will improve and more than likely they will move higher in anticipation of this event.

Therefore, I will remain in a locking position while these rate improvements are still available.  We could see rates move slightly lower but I feel confident they will move higher by year end.

Current Outlook: locking