Mortgage Rate Update December 30, 2010

Mortgage rates are better today.

Rates actually improved yesterday afternoon following a better-than-expected 7-year note auction.  I had predicted the possibility of volatility this week due to the holiday and that’s what we got.  However, the markets did not trade with any overall direction it simply see-sawed back and forth.

Interest rates are reacting mildly to a trio of economic reports that were better-than-expected this morning.  This morning’s weekly jobless claims figure was at the lowest level since July of 2008.  At first glance this is encouraging but the markets know that employment figures during the holidays can be misleading.  Who wants to lay-off a worker the week before Christmas?

The National Association of Realtors reported that the number of pending home sales grew at a faster clip than expected in November.  Lastly, an index which tracks business activity in the Chicago region showed better than expected economic activity.

For the year mortgage rates are ending 2010 .50% lower than where they started BUT about 1.0% higher than they were 2 months ago.  I fully expect rates to move higher during 2011 but like any year it won’t happen in a straight line.
Happy New Year!  Rate Update will be on vacation tomorrow.

Current outlook: neutral