Mortgage Rate Update May 23, 2011

Posted on by Evan in Rate Update

Mortgage rates are lower this morning.

Negative economic news from abroad is helping mortgage rates to move lower this morning as investors flee “riskier” assets for the “safety” of US-denominated debt securities; including mortgage-backed bonds (MBS’s).

Both Greece & Italy saw their credit ratings lowered over the weekend which has prompted renewed attention on the financial vulnerability of other European economies.

Spain's election creates more uncertainty

In addition, Spain’s government suffered major losses in elections over the weekend as voters used the opportunity to protest against steep austerity spending cuts.  The surprising results have investors wondering if Spain will be able to adjust it’s spending and still meet its debt obligations.

Here at home stocks are trading lower on all this news which is helping mortgage rates and the 10-year treasury yield has fallen back below an important level.  Speaking of treasuries the US government will be auctioning $99 billion of them Tuesday-Thursday so MBS’s will have to compete with supply this week.

Current Outlook:  floating