Mortgage Rate Update November 23, 2011

Mortgage rates are mostly unchanged again today.

It became evident earlier this morning that fear continues to spread regarding the European debt crisis.  Even Germany, long perceived as the safest of EU nations, had trouble auctioning off 10-year bunds earlier today as investors steer clear of the ailing region.  For the first time since the Euro currency was created  the German Government failed to raise enough demand to auction off its entire supply of bund offerings.

Despite the escalation of debt problems in Europe interest rates here in the US are unchanged thanks to better than expected economic data.  In a mixed report the Commerce Department announced that personal income rose by more than expected last month but consumers spent less than was anticipated.  The Personal Consumption Expenditure price index (PCE) showed that inflationary pressure remains tepid which is a good sign for mortgage rates.  Weekly jobless claims rose slightly last week but remains below the important psychological level of 400,000 raising hopes that the employment picture will improve in the coming months.

In my view there is still no meaningful change to the broader outlook for mortgage rates.  Problems in Europe continue to unfold and many analysts believe that could drag the developed world back into recession.  Analysts are also predicting that credit ratings of France will be downgraded in the coming days.  Bad news for the economy is often good news for mortgage rates yet rates are unable to break below the current technical level.  You might as well float until Monday.  Rate Update will return then.

Current Outlook: floating