Mortgage rates are unchanged this morning.
Since Wednesday of last week 30-year fixed rates have dropped by .375% as investors have shifted investment dollars away from equities and into “safer” bond investments (in that time both the S & P 500 and Dow Jones Industrial Average have also dropped). The shift away from risk was prompted by last Thursday’s poor employment report.
As we reported in Monday’s rate update the second quarter earnings season kicks off today. The overall health of earnings report will likely dictate the direction of mortgage rates for the next few weeks. If reports are perceived to be better than expectations mortgage rates will increase and vice-versa.
That said, what are investors looking for? In my opinion it comes down to the financial industry. I believe that investors are already expecting the worst out of commodity, retail, and industrial stocks. However, if financial stocks beat expectations then the market may be left thinking that the industry which drug us into the recession could be the same that leads us out.
Because of the uncertainty surrounding earnings reports we will remain in a neutral position. The safe play is to lock in rates today since we are .375% better off from last week.
Current Outlook: neutral