Mortgage Rate Update August 24, 2011

Posted on by Evan in Rate Update

Mortgage rates are worse this morning.

The Commerce Department reported today that durable goods orders from factories rose sharply in July.  At first glance the report looked like a positive sign for the economy.  However, a separate measurement of business investment showed a decline which is a troublesome sign if businesses are hesitant to invest in growth.

Mortgage rates have risen every day this week as stocks rebound after four weeks of declines.  US stocks started the morning higher but have since reversed into negative territory which may open the door for rates to stabilize or even move lower.

AT THIS POINT I EXPECT RATES TO REMAIN IN A TIGHT RANGE UNTIL FRIDAY'S SPEECH IN JACKSON HOLE, WY

Mortgage rates will have to compete with another US Treasury auction.  The auction is for $35 billion  in 5-year notes.

The bottom line is that rates are likely to remain in a tight range (+ or – .125%) until Friday when Fed Chairman Ben Bernanke is scheduled to speak on the economy.  Should he explicitly announce a third round of quantitative easing expect rates to improve.  However, I don’t think he will be that aggressive.  I believe he’ll leave the door open which means we’ll have to wait to see how the stock market reacts.

Current Outlook:  neutral