Mortgage Rate Update February 29, 2012

Mortgage rates are mostly unchanged this morning.

Similar to yesterday domestic economic data is fairly healthy, which would normally put upward pressure on rates, but concerns over Europe are preventing that from happening.

The Commerce Department reported this morning that 4th quarter Gross Domestic Product grew at a faster clip than previously expected (+3.0%).  In addition, inflationary pressure, which is bad for mortgage rates, also rose by faster than expected but still at a relatively low level.

Speaking of inflation, Fed Chairman Ben Bernanke testified in front of Congressional lawmakers today that higher gas prices are likely to put upward pressure on prices in the near-term but that he doesn’t expect them to be a long-term burden.  Bernanke also made encouraging comments about the economic recovery stating that unemployment rates have declined, “somewhat more rapid than might have been expected.”  Good news for the economy is often bad news for mortgage rates.

However, uncertainty regarding the European debt crisis persists.  The European Central Bank reported earlier that they lent €529.5 billion in cheap 3-year loans to various European financial institutions.  The program is designed to provide liquidity to the financial sector.  The amount of money lent through this facility was more than analysts had expected leading investors to believe that European banks are in worse shape than previously thought.

Mortgage rates are back down very close to all-time lows.  With the US economy showing continued signs of improvement I will shift to a locking bias.

Current Outlook: locking bias