Mortgage rates are priced slightly better today.
In yesterday’s ‘rate update’ I laid out my prediction for how the Fed’s monetary policy statement would ready and how it would impact mortgage rates. I got half of my prediction right. The Fed DID NOT indicate that any further quantitative easing was imminent BUT this DID NOT cause mortgage rates to rise like it did 6 weeks ago.
Why did the interest rate markets react differently to a very similar statement? Clearly the reemergence of the European debt crisis is playing a major role. On that note, it was reported earlier today that economic confidence on the part of European businesses and consumers fell sharply in April to the lowest level in over 2 years. Since the recipe for solving the debt crisis is partially based on economic growth in the region this news is causing jitters which helps US interest rates remain low via the “flight-to-safety” trade.
Here in the US weekly jobless claims were reported to have declined by less than expected last week. However, the Labor Department revised higher previously released figures showing that the employment picture remains weak. Bad news for the economy is good news for mortgage rates.
It wasn’t all bad news though. The National Association of Realtors reported that pending homes sales jumped by 12.8% in on a year over year basis. Tomorrow we’ll get an initial reading on Q1 GDP. Technical trading patterns continue to suggest locking is the best bet.
Current Outlook: locking bias