Mortgage Rate Update November 16, 2011

Mortgage note rates are unchanged for the 10th straight day.

I’m hesitant to even report US economic data since the markets are so laser focused on Europe but here goes anyways: Inflation at the retail level of our economy as measured by the Consumer Price Index was tamer than expected last month.  This is good news for mortgage rates.  In another report industrial output was reported stronger than expected last month.  Ordinarily this would be bad news for mortgage rates.  Lastly, the National Home Builders Housing Index was also reported better than expected.

Now that we have that out of the way lets talk about Europe.  In Italy, new Prime Minister Mario Monti released the names of his cabinet for his emergency government.  Most of the names come from academia and the private sector so some analysts are concerned about the political clout this cabinet will carry in pushing through significant reforms.

The European Central Bank reentered the government debt market today buying up Italian, Portuguese, and Spanish paper.  The additional demand helps to keep yields lower for these countries.

Sentiment continues to shift day-by-day regarding the EU debt crisis.  Unfortunately I don’t see this story coming to an end anytime soon.  In the meantime mortgage rates are being prevented from moving lower because the US 10-year Treasury note is stuck in a tight trading range between 1.95%-2.10%.  Until it breaks this range I expect mortgage rates to remain relatively unchanged.

Current Outlook: neutral