Mortgage Rate Update April 28, 2011

Mortgage rates are priced slightly better this morning although the best available note rates are unchanged.

Yesterday’s Fed monetary policy statement & press conference were received with no fireworks despite all the attention.  In his first ever post meeting press conference Fed Chairman Ben Bernanke made it clear that the Fed plans to keep short-term interest rates low in the near-term, complete QE2 by the end of June, and characterized current inflationary pressure as “transitory”.

According to data out this morning the US economy grew at a less than expected rate of 1.8% in the first quarter as higher food & energy prices weighed on consumer spending.  In the same report a closely watched inflation gauge showed that prices grew at an annualized rate of 3.8% over the same time frame.  Normally when inflation comes in higher than expected it is a bad sign for mortgage rates.

Also disappointing investors this morning is the weekly read on jobless claims.  The report showed that initial jobless claims unexpectedly increased by 25,000.  Bad news for the economy is often good news for mortgage rates.

From a technical perspective mortgage-backed bonds look extremely overbought so unless the markets dramatically shift their outlook on the economy I believe rates have to reverse higher.

Current Outlook: Locking