Mortgage Rate Update February 7, 2013

Mortgage note rates are basically unchanged from Monday.

Its been a relatively light week for the economic calendar so mortgage rates have taken direction from renewed focus on Europe and technical trading patterns.  Interest rates appear to have fallen into a new range that is approximately .25%-.375% off the all-time low levels of 2012.

In Europe, analysts continue to keep close tabs on the political climate in Italy and Spain.

Despite the European’s Central Banks commitment to back EU member government bonds a swift change in political direction could derail the austerity measures that have allowed the debt crisis to fall out of focus in the financial markets.

From a technical perspective mortgage-backed bonds continue to trade right below the 200-day moving average.  It would likely take a big miss on an economic report or renewed fear over Europe to see rates improve significantly from current levels.  I wouldn’t be surprised to see rates improve modestly in the coming days but over the long haul I still think it wiser to lock than risk floating.

Lastly, Federal Reserve Bank of Chicago President told CNBC this morning that he thinks the Fed will continue its bond buying programs, designed to keep long-term interest rates low, for much of 2013.  If he’s right then rates may rise but the Fed’s stimulus will keep a lid on how high they go.

Current Outlook: locking bias