Mortgage Rate Update January 12, 2012

Mortgage rates better this morning.

Weaker than expected domestic economic news & cautious comments from Europe have helped mortgage rates achieve all-time low levels again.

The Labor Department reported this morning that initial jobless claims unexpectedly rose by 24,000 last week.  Prior to this release we had seen gradual improvements over the previous 2 months so this has investors concerned.

In a separate report US Retail Sales were shown to have grown by less than expected last month.  Excluding volatile auto & gasoline purchases retail sales actually fell by .2% on a seasonally adjusted basis.  Bad news for the economy is often good news for mortgage rates.

The news out of Europe is mixed this morning.  European Central Bank president Mario Draghi commented yesterday the outlook for the European economy is still highly uncertain.  Investors dislike uncertainty which helps interest rates to remain low.

Draghi’s comments did not curtail demand for Spanish & Italian government bonds auctions however.  Each country was able to successfully sell newly issued debt earlier today lower yields than they were previously subject to.  This news is a signal that investors may be more comfortable with the fiscal condition of the Euro-zone.

With rates back down at all-time low levels I am shifting my outlook to locking because its tough to imagine rates getting significantly better.

Current Outlook: locking bias