Mortgage Rate Update March 29, 2011

Mortgage rates are unchanged this morning.

Mortgage rates remain unchanged this morning as mortgage-backed bond (MBS) prices hang to technical support.  Should MBS prices close below this important layer of support we should expect higher mortgage rates in the near-term.

Standard & Poor’s cut the credit rating of Portugal & Greece overnight.  If you’ll recall back to the summer of 2010 sovereign debt concerns was a major catalyst in driving mortgage rates to all-time lows.  Given that the markets are no longer shocked by this news it is not having the same impact now.

The latest S&P Case-Shiller Home Price Index figures showed that home values continued to decline as of January.  It is clear that the housing industry continues to be an anchor for the economic recovery.  This is why it’s important to protect the mortgage interest deduction!

The US Treasury is back on the auction block today with $35 billion in 5-year Treasury notes.  Thus far in 2011 5-year’s have been a spot of weakness so we’ll need to keep a close eye the auction results.

For now, MBS prices continue to test technical support.  So long as we hold I will maintain a floating bias with the hopes that MBS prices bounce higher (pushing rates lower).  However, we need to be cautious because should MBS prices move below this layer of support rates will likely move another .125%-.25% higher in quick order.

Current outlook: floating