Mortgage Rate Update November 26, 2012

Mortgage rates worsened modestly last holiday-shortened week as investors grew optimistic about the economy (black Friday) and a possible deal to avoid the fiscal cliff.

Although retail sales over the weekend were up a robust 13% compared to last year uncertainty regarding the fiscal cliff and Europe are helping US interest rates remain low.

Most accounts suggest that lawmakers in Washington DC are still far from reaching a compromise on the budget to avoid the impending fiscal cliff.  As long as the two sides remain far apart and the clock is ticking the uncertainty will help support low interest rates.  I still maintain that the most likely outcome is for a last minute deal that avoids the fiscal cliff in the near-term but kicks the can down the road only a few months.

Speaking of last minute, European finance officials are meeting today for (another) summit to talk about whether or not they should release another tranche of bailout funds to Greece.  Greek officials contend they have implemented enough austerity to qualify for the funds while other Euro nations are seeking more.  Chances are they will reach an agreement but the uncertainty is still helping mortgage rates.

Current Outlook: floating