Most mortgage rates are better this morning after they improved yesterday around lunch time like we had predicted in ‘rate update’.
Mortgage-backed bonds (MBS’s) are now trading up against strong technical resistance as shown in THIS CHART. Unless we get compelling weak economic data I expect rates to remain at current or higher levels.
Fed Chairman Ben Bernanke is testifying in front of congress right now. It’s painful to watch congressman throw the Fed Chairman under the bus for their own political posturing ahead of mid-term elections. The bottom line is Bernanke inherited a ticking time bomb and has done the best he can to prevent complete disaster. Meanwhile Congress has sat on their collective hands over the past few months and pointed fingers at others. But as Jeremy Siegel once said it’s tough to get upset with people you don’t have very high expectations for…
In his testimony the Chairman made a point to separate last weeks surprise increase to the discount rate from an overall policy shift of credit tightening. He stated that he expects to keep the Federal Funds Rate low for sometime to support the economy. These comments should help mortgage rates remain low.
Yesterday’s $44 billion 2-year note auction was met with strong demand. Today the US Treasury will deliver $42 billion in 5-year notes. Given that the Greek fiscal crisis is still in full swing these auctions will benefit which should help support mortgage rates.
Looking ahead there is still plenty of economic data due out over the next 48 hours. With 30 year fixed rates below 5.00% (5.03% APR) it’s a good time to lock.
Current outlook: locking bias