Rate Update December 10, 2009

Despite the fact that mortgage-backed bonds (MBS’s) have sold off for 3 straight days mortgage rates effectively remain unchanged this morning.

For the first time this week the markets digested some significant economic data this morning.  The Labor Department released their weekly jobless claims report.  The results were mixed.  Initial jobless claims unexpectedly increased last week but the four-week moving average fell to the lowest level in 14 months.  Overall this report is likely to have a minimal impact on mortgage rates.

What does have a significant impact on mortgage rates is bond supply.  Yesterday’s 10-year note auction on the part of the US Treasury was not well received.  On the surface it looks as though investors are not excited to hold longer-term fixed income securities with steep federal deficits expected for years to come.  The US Treasury will auction $13 billion in 30-year bonds today.  The prospect of the additional demand is likely weighing on MBS’s today.

We have been in a locking stance since Monday and will continue with that outlook today.

Current outlook: locking