Mortgage Rate Update July 26, 2012

Mortgage rates are slightly worse this morning compared to Monday.  The financial headlines are mostly unfriendly for interest rates this morning but we still are witnessing all-time lows..

European Central Bank (ECB) President Mario Draghi remarked this morning that the ECB is prepared to protect the Euro-zone from collapse.


His comments are being interpreted by the markets as an encouraging sign and possibly a signal that the ECB is ready to step in and purchase peripheral economies bonds.  Good news for Europe is bad news for US mortgage rates.

In domestic economic news the Commerce Department reported that durable goods orders increased by 1.6% from a month earlier which was better than expected.  However, when you strip out volatile aircraft sales new orders fell by 1.1%.

In a separate report weekly jobless claims were reported to have fallen by much more than expected last week.  It is unclear whether this is due to job growth, expiration of unemployment benefits, or tweaks to the statistical seasonal adjustment made to the data.

Since July 5th mortgage rates have improved on 11 out of 14 trading days.  From a technical perspective the momentum may be running out of steam.  I would not be surprised to see rates worsen over the next few days.

However, the long-term outlook hasn’t changed.  The ECB’s comments today are similar to words that have been expressed in the past.  Until a concrete plan is proposed and approved for Europe US interest rates will remain low.

Current Outlook: near-term locking bias