Mortgage Rate Update February 23, 2012

Although note rates are unchanged today the associated closing costs are slightly less so things have improved compared to yesterday morning.

Positive economic news and additional debt supply may make it hard for rates to improve today.

The latest look at weekly jobless claims showed that the number of people filing for unemployment benefits went unchanged last week.  Analysts were expecting a small increase so this is good news for the economy and subsequently bad news for mortgage rates.

The US Treasury will complete this weeks $99 billion in new debt offerings with $27 billion in 7-year notes.  New debt supply often makes it hard for rates to improve because it effectively acts as competition for mortgage-backed bonds.

Another underlying factor impacting rates as of late is the rise of gasoline prices.  Higher pump prices can lead to systemic inflationary pressure which is bad for mortgage rates.  A variety of forces impact gasoline prices but political tension in Syria & Iran is causing speculators to push the price of gas higher.

For now I expect rates to hold steady but the fact that the 10-year Treasury yield has held below the important technical level of 2.08% bodes well for rates over the next week.  I will maintain a floating position.

Current Outlook: floating