Mortgage Rate Update July 25, 2011

Although note rates are unchanged this morning the associated closing costs are slightly higher.

Our focus will remain on debt-ceiling negotiations & European debt problems again this week.  The economic calendar kicks off tomorrow and will remain relatively full throughout the week.  In addition, the US Treasury is scheduled to auction $99 billion in Treasury notes starting with 2-year’s tomorrow.

Lawmakers remain in gridlockas the deadline for getting the debt-ceiling raised looms 8 days out.

Most analysts predicted that a debt reduction package would come “last minute” but I don’t think too many analysts believed the two sides would be this far apart at this stage in the game.  If uncertainty persists surrounding a solution we’ll likely see stocks sell-off but it’s more difficult to predict what will happen with interest rates.

In Europe Greece’s credit rating was down-graded to junk by Moody’s (not sure what took them so long).  For now, the bailout package that was passed last week by EU officials has analysts optimistic about the outlook for other Euro-zone economies (i.e. Portugal, Italy, and Spain).  But as we know sentiment can change quickly.

There a lot of open-ended questions right now in the financial markets.  Whenever there is this much uncertainty it makes forecasting very difficult.  Mortgage rates remain near historic lows so I am favoring a locking stance.

Current Outlook:  locking bias