Mortgage Rate Update September 13, 2011

Mortgage rates are priced slightly worse this morning.

News out of Europe continues to grab investors attention as they wait to see how far reaching a Greek default will be.  Will the damage be contained to Greece or will it cause a run on banks in Portugal, Spain, and Italy as well?  The more far-reaching the reaction the more likely it is we’ll see rates improve here in the US.

The Italian Government’s latest auction of Italian 10-year notes was met with tepid demand which has analysts concerned over the health of the Euro-zone financial system.  Spain is scheduled to auction €4 billion on bonds Thursday so we’ll have to see how investors respond to that auction as well.

The US government will auction $10 billion in 10-year notes today.  Yesterday’s 3-year note auction was met with mediocre demand.  A weak auction would threaten push mortgage rates higher and vice versa.

The next 2 days are filled with economic releases including retails sales, inflation reads, and job data.  The economic outlook has been weak as of late which is partly why rates are so low.  Should this trend continue then rates will remain low.  If the data gives a cause for optimism we’ll have to shift to a locking stance.

Current Outlook:  locking bias