Encouraging economic news and renewed hope regarding the European debt crisis have caused mortgage rates to increase this week.
Starting on Monday the financial markets have absorbed encouraging domestic economic data including better than expected retail sales, higher than expected industrial production, and significantly higher housing starts & permits. Good news for the economy is typically bad news for mortgage rates.
However, the run ended this morning when the Labor Department reported higher than expected jobless claims figures. The number of unemployed had been trending lower over the past month so this morning’s report caught analysts off-guard.
Over the past 3 days Spanish bond yields have fallen signalling that investors feel more confident in a resolution, which is bad for US interest rates.
European leaders begin a summit in Brussels today. We all know the record for these summits is not good. We’ve seen US mortgage rates rise leading up to these summits only to have them reverse lower after nothing gets accomplished.
Will this time be any different? If you think not then float into next week. Assuming it’s the status quo in Europe US mortgage rates should recover the .125% lost this week. However, let’s not lose sight of the fact that we’re only .125% off all-time low levels. You may want to lock in and sleep well at night.
Current Outlook: neutral