Mortgage Rate Update March 21, 2012

Mortgage rates are unchanged today.

Minneapolis Federal Reserve Bank president Narayana Kocherlakota commented in a speech yesterday that he believes no new monetary stimulusis needed for the US economy to maintain gradual growth and that he foresees the unemployment rate falling to the high-7% range by the end of the year.

Good news for the economy is often bad news for mortgage rates.

According to the National Association of Realtors sales of existing homes declined modestly last month but still reached the highest level for February in 5 years.  On a year-over-year basis sales of existing homes her up almost 9%.  Furthermore, the median home price rose slightly on a year-over-year basis.  The report is an encouraging sign that the housing sector is indeed on the mend.

I wouldn’t be surprised to see rates improve modestly from current levels but it will only be temporary.  Mortgage rates are likely to remain at these levels or higher unless fears over the European debt crisis flare up again or the Fed makes a surprise announcement regarding another round of quantitative easing.

Current Outlook: neutral