Rate Update June 22, 2010

Mortgage rates are priced slightly better this morning.

Interest rates are better this morning on worse than expected homes sales figures.  The National Association of Realtors reported that existing home sales for May fell by 2.2%.  Analysts had expected an increase of 5.0%.  Bad news for the economy is often good news for mortgage rates.

Mortgage rates are also better on renewed financial fears in Europe.  This morning the UK announced a slimmer federal budget as they try and calm market nerves over their fiscal health.  Also, Fitch Ratings cut the credit rating of French bank BNP Paribas.  These announcements are helping to fuel the “flight-to-quality” trade which drives yields lower here in the US.

The US Treasury is back on the auction block today with $40 billion in 2-year notes.  The additional supply is likely to draw strong demand in light of the weak economic outlook.

Current outlook: floating