Mortgage Rate Update November 29, 2011

Mortgage rates have bounced back down to the level from late last week.

There is still no formal announcement out of Europe but leaders continue to meet in Brussels with the goal of unveiling a revised plan to curb financial contagion.  In the meantime, Italy’s borrowing costs continue to surge higher.  The yield on Italy’s 10-year note is currently above the unsustainable level of 7.00% (@ 7.56%).  Should EU leaders agree to a new deal it could pressure mortgage rates higher but we’ve heard this song before and previous announcements have not proven themselves over time.

The Conference Board’s monthly read on consumer confidence came in above expectations and at the highest level since July.  Good news for the economy is often bad news for mortgage rates.

In housing news, the S&P Case-Shiller Home Price index showed that home prices across the 20-city index declined on a monthly and annual basis.  Here in Portland the index fell by 5.7% from a year ago but was up .1% from last month.  Click THIS LINK for a closer look at the graph below.

Looking ahead, tomorrow brings us the first of 3 important employment reports this week.  The all-important jobs report won’t arrive until Friday but we could see volatility beginning tomorrow.  Stronger than expected jobs numbers OR a credible debt deal out of Europe could pressure rates higher.

Current Outlook: locking bias in the near-term, longer-term outlook is neutral