Mortgage rates are higher today compared to Monday.
Weaker than expected demand for US treasury auctions and optimism regarding Europe have been pressuring mortgage rates higher this week.
The US Treasury auctioned 3-year & 10-year notes over the previous 2 days and demand for these securities was less than anticipated. Today, $16 billion in 30-year bonds will be auctioned. Should this auction also be met with weak demand it could put additional pressure on rates to move higher.
Will the European Central Bank (ECB) come to the rescue? Over the past week investors’ outlook for the European debt crisishas become less disastrous.
There is much speculation that the ECB will announce a plan to help Spain and Italy avoid fiscal catastrophe. As a result, the “flight-to-safety” trade, which has helped US mortgage rates achieve all-time lows, has seen some unwinding.
My personal belief is that major hurdles remain for Europe and if I’m right I wouldn’t be surprised to see mortgage rates reverse back down to all-time low levels in the future.
If you’re not a fan of volatility it might be a good time to lock in but if you can afford to be patient I think it will pay-off in the long run.
Current Outlook: neutral