Mortgage Rate Update May 17, 2011

Mortgage rates are better this morning on weaker than expected economic data.

Bad economic news is typically bad news for stocks and good news for interest rates and that’s what we’re experiencing this morning.

The Commerce Department reported this morning that construction for single family homes and apartments sank by 10.6% last month.  On a year-over-year basis new home construction fell 23.9% which is much more than analysts had expected.

In a separate report the Federal Reserve reported that output from US manufactures fell last month for the first time in 10 months.

The worse than expected economic news is pushing stocks lower which is helping to drive capital into bonds and pushing yields a little lower.

The 10-year Treasury yield has fallen below an important layer of technical support @ 3.14% so if rates can close at these levels we may see rates improve even lower.

Current Outlook: floating bias