Mortgage Rate Update June 16, 2016

Mortgage rates remain at multi-year lows.

Below is a chart of the yield on the US 10-year treasury yield from 2014-current.  As you can see the current yield at 1.55% is the lowest going back that far.  Mortgage rates tend to track the direction on the US 10-year treasury yield.

Why are rates so low?  There is currently a lot of uncertainty in the financial markets.  One week from today British voters will take to the polls and decide whether or not to remain in the European Union or exit.  There are many unanswered questions if they do leave.  Financial markets do not like uncertainty and as a result mortgage rates have declined on a “flight-to-safety”.

Central Banks around the globe are also contributing to uncertainty.  Earlier today the Bank of Japan left their aggressive monetary policy in place.  Many analysts had predicted that the Bank of Japan would implement additional measures to help stimulate the Japanese economy so the inaction caught the global financial markets by surprise.

Not surprising was the US Federal Reserve leaving short-term interest rates unchanged yesterday.  In the post-meeting press conference Fed Chairwoman Janet Yellen stated, “We are quite uncertain about where rates are heading in the longer term.”  Only a few weeks ago the Fed had set expectations for further rate hikes in 2016.  Now that is getting called into question.

From a technical perspective momentum remains on our side.  I will maintain a floating bias.

Current Outlook: floating