Mortgage Rate Update March 7, 2011

Mortgage rates are unchanged again this morning.

Oil prices are back off to the races this morning as fighting intensified over the weekend in Libya.  As I’ve stated previously on ‘mortgage rate update’ oil prices are not rising on actual supply disruptions.  Instead, they are increasing on fear that disruptions will take place int he future.  Over the weekend those fears intensified when Saudi Arabia, the world’s largest oil exporter, announced it would crack down on any defiant protesters.  Disruptions to Saudi Arabia’s oil would be disastrous for the global economy.

Mortgage rates remain in the middle of a see-saw match between investors who view the current spike of oil prices as inflationary (which would cause rates to rise) and those who see it damaging the already fragile economic recovery (which would help rates move lower).

The US Treasury will deliver $66 billion in US notes & bonds this week.  The auctions kick off tomorrow with $32 billion of 3-year notes.

At this point rates have been somewhat stable over the past week.  The longer-term trend seems evident: rates will be moving higher with time.

Current outlook: neutral