Mortgage Rate Update August 25, 2011

Mortgage rates are mostly unchanged this morning.

For the week interest rates on treasury notes & mortgages have risen by .125%-.25%.  This morning mortgage rates appear to have stabilized and may even be poised to improve on weaker than expected jobless claims numbers.  The weekly report showed that the number of people filing for unemployment benefits increased by 5,000.  Bad news for the economy is often good news for rates.

Bank of America stock, which had fallen by 30% in the past month, is up sharply this morning on news that Warren Buffett will invest $5 billion in the ailing financial institution.  Buffett has become one of the worlds richest men making investments in solid companies when the markets are filled with uncertainty so this news is giving investors confidence.

The US Treasury will auction $29 billion in 7-year notes later today.  Yesterday’s 5-year note auction was not as well bid as analysts had expected which put pressure on rates to move higher.

Lastly, I wouldn’t be surprised to see volatility in the financial markets as investors position themselves in front of tomorrow’s much anticipated speech by Fed Chairman Ben Bernanke in Jackson Hole, WY.  Last year the Fed Chief used this forum to announce the details of “QE2”.  Will he repeat again this year?  We’ll find out tomorrow.

Current Outlook:  neutral