Mortgage Rate Update April 7, 2011

Posted on by Evan in Rate Update

Mortgage rates are priced slightly worse this morning.

I’ve referenced the technical trading patterns in the past few ‘rate update’s.  Yesterday, mortgage-backed bonds (MBS’s) closed below important technical support which is not a good sign for interest rates.  Should MBS’s fail to rebound and close above this support level then we’d expect rates to enter a new range that will be .125%-.375% higher.

In economic news, as expected the European Central Bank raised short-term rates by .25%.  However, they also were explicit in announcing that this was not a signal of future hikes.  As I outlined in yesterday’s ‘rate update’, higher short-term rates in Europe would likely push yields up in the US as well.

Weekly jobless claims fell again last week.  The 10,000 drop in people applying for jobless benefits marked the 7th time in the past 10 weeks that claims fell.  Good news for the economy is often bad news for mortgage rates.

We will watch MBS’s closely today and remain in a cautiously floating position.  Should MBS’s close below technical support I will shift my outlook to locking tomorrow.

Current outlook: floating cautiously