Mortgage Rate Update July 16, 2012

Mortgage rates remain at all-time low levels.

Weaker than expected economic news is helping mortgage rates this morning.  The Commerce Department reported that retail sales fell by .5% last month.  The drop marks the 3rd consecutive month that consumers have purchased less goods than the month before.


In addition, a survey of consumer confidence also came in lower than expected.  Bad economic news is good for interest rates.

The economic calendar is busy this week and includes a look at inflation (tomorrow) and testimony from Fed Chairman Ben Bernanke (tomorrow & Wednesday).  It is clear the US economy is struggling.  The markets will be listening for any signal that the Fed plans to stimulate the economy via another round of quantitative easing.

European officials continue to negotiate details regarding the bailout for Spanish banks.  While they devote their energy to that end the underlying debt crisis persists.  Unless Germany agrees to a plan to mutualize EU debts the crisis will continue.

From a technical perspective the 10yr Treasury yield is testing a significant layer of resistance at 1.46%.  Should the yield remain below this level for a couple days it could signal even lower interest rates.  However, more often than not rates tend to increase in these conditions.

Current Outlook: near-term locking bias (<14 days), long-term floating (>14 days)