Mortgage Rate Update October 27, 2011

Better than expected economic news here in the US and significant progress in preventing financial contagion in Europe have pushed mortgage note rates higher this morning.

An initial read on Gross Domestic Product the 3rd quarter showed that the economy grew by a 2.5% annualized rate in the 3rd quarter.  This is the best growth rate in a year and better than analysts had expected.  Virtually all measures within the GDP report were far stronger than the corresponding data in the 2nd quarter.  Good news for the economy is bad news for mortgage rates.

European leaders burned the midnight oil staying up until 4AM on Thursday morning to resolve their differences and craft a massive bailout plan to help ease the pain of the ongoing debt crisis.  Details of the complex plan are still being analyzed by the markets but the initial reaction has been positive for stock markets around the world and negative for interest rates.

Adding to pressure for rates to move higher is the US Treasury’s scheduled bond auction which will introduce $29 billion in 7-year note supply.  At this point unless confidence shifts regarding the EU’s bailout plan I don’t expect interest rates to move lower.

Current Outlook: locking