Mortgage Rate Update January 27, 2011

Mortgage rates are priced worse compared to yesterday.

The economic data out today came in worse than expected.  The Commerce Department reported that durable goods orders in December declined compared to November.  Economists were expecting modest growth.

This weeks jobless claims figures increased by much more than expected.  Bad news for the economy is often good for interest rates.  Thus far, rates are unchanged this morning after worsening a little yesterday afternoon.

In yesterday’s monetary policy statement the Fed made modest changes to their outlook but nothing was significantly different.  They did acknowledge rising food and commodity prices for the first time but stated that “longer-term inflation expectations have remained stable.”

Rates are back at the high end of the .25% range they’ve traded in since mid-December.  Earlier in the month I stated that we could probably wait until the next jobs report before rates would break out of this range and that still seems to be the case.  However, when rates do break I expect them to break higher.  In the meantime let’s hope they float back down to the lower end of the range again.

Current outlook: near-term floating bias, longer-term neutral