Mortgage Rate Update November 30, 2011

Mortgage rates are mostly unchanged this morning despite the fact that US Treasury yields are higher.

Overseas developments in Europe & China as well as better than expected economic data are pressuring yields higher this morning.

In a coordinated fashion some of the world’s biggest central banks announced a plan today to help European financial institutions stave off liquidity pressures stemming from the debt crisis.  The announcement doesn’t change the grim outlook for sovereign debt but does show that foreign banks are willing to help in the process.  On the news equity markets around the world, including here in the US, are all trading sharply higher which is not welcome news for mortgage rates.

Speaking of central banks and liquidity, China’s central bank reduced reserve requirements for that countries banks today in a move to help encourage growth.  This is welcome news for stock investors but not good for mortgage rates.

Here in the US there was plenty of economic news to pick through.  According to the ADP private payroll report US firms added over 200,000 jobs in November which is much higher than expected.  Friday’s government version of the jobs report carries more weight and is rarely in unison with the ADP report but for now this could put upwards pressure on rates.

In housing news, the National Association of Realtors reported that pending homes sales jumped by 10.4% in October from September.  Expectations were for a modest gain so this is also adding optimism to the markets.

Based on all the good news for the economic outlook this morning we would think that mortgage rates would be moving higher especially since the yield on US Treasuries have.  However, investors may be hanging on to comments by a Fed official earlier in the week in which additional mortgage-backed bond purchases on the part of the Federal Reserve were discussed.  I will keep a locking bias.

Current Outlook: locking bias