Mortgage Rate Update November 19, 2012

Mortgage rates are starting the week priced slightly worse than late last week (note rates are unchanged).

In Thursday’s ‘rate update’ I pointed out that mortgage rates had benefitted from a 1,000 loss in the stock market over the previous month.  This morning stocks are reversing course on strong housing data and optimism about a resolution to the fiscal cliff.

According to reports bipartisan lawmakers have agreed in principal on taking a 2-step approach where a “down payment” is made in 2012 on fixing the fiscal cliff and more permanent adjustments are made next year.  Furthermore, at least at this point both Republicans and Democrats are in agreement that revenues (AKA taxes) will be raised.  The reduction in uncertainty is why the stock market is rallying.

In housing news existing home sales were reported to increase by more than expected last month.  In a separate report homebuilder’s confidence hit the highest point in over 6 years.

At this point it looks like rates may inch up slightly this week but the fiscal cliff negotiations are far from over.  Furthermore, geopolitical tension in the middle east should help rates remain low.

Have a great THANKSGIVING!  Rate Update will be back one week from today.

Current Outlook: neutral