Mortgage Rate Update May 22, 2012
Although note rates are unchanged today the accompanying closing costs are higher so overall rates are worse.
In the near-term it looks as if mortgage rates may move a little higher. Better than expected US housing data, new government debt supply, and optimism around Europe are to blame.
The National Association of Realtors reported today that existing home sales were slightly higher in March than was expected.
Compared to March 2011 home sales climbed by 5.2% which represents the 9th straight month of annual growth. Good news for the economy is often bad news for interest rates.
Mortgage rates are also having a tough time thanks to new government debt supply (CLICK HERE to understand why). The US Treasury will sell $35 billion in 2-year notes later today and then follow that up with another $64 billion in the next 48 hours.
Surprisingly, optimism is building in Europe as finance officials set to meet in Brussels beginning tomorrow. International Monetary Fund leader Christine Lagarde publicly backed the idea of joint Euro-bonds so that weaker nations (i.e. Greece, Portugal, Spain, and Italy) could benefit from the triple A rating of Germany and other stronger nations. Over the past two years EU leaders have been slow to adopt significant measures which is partially why we find ourselves where we are. If this weeks meeting can shift market sentiment it would likely pressure rates higher.
Current Outlook: near term locking, longer-term float