Mortgage Rate Update November 5, 2012
Mortgage rates are slightly better this morning.
It’s election week and the markets are squarely focused on tomorrow. How will interest rates respond? It’s important to note that no one knows for sure but many analysts believe that if President Obama is re-elected rates will remain low and maybe even fall by .125%. Should Governor Romney be elected stocks are likely to rally on his business friendly platform and that could push rates up by .125%-.25%.
At this point all the polls are within the margin of error so it’s too close to call.
Aside from US elections the markets will also be watching an important vote in Greece. The Greek Parliament is set to vote on further austerity measures on Wednesday. The cuts are a requirement of receiving greater bailout funds and failure to pass the measures could spark a “flight-to-safety” which would help US interest rates move lower. Although the Euro debt crisis has been relatively quiet over the previous month it is still very much a threat to the global economy.
Lastly, the US Treasury is set to auction $72 billion in notes and bonds this week. This includes $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds Thursday. With rates near all-time low levels the combination of a Romney win and fresh debt auctions with long durations could cause rates to rise quickly.
Current Outlook: neutral