Rate Update May 26, 2010
Fixed mortgage rates are higher this morning.
Better than expected economic data and improved investor sentiment around the globe are pressuring rates higher this morning.
In the first of two reports released by the Commerce Department this morning demand for durable goods orders was shown to be higher than expected in April. In addition, new home sales also came in higher than expected. Good news for the economy is often bad news for mortgage rates and we’re seeing that today.
Despite the fact that there is no new information regarding the European debt crisis or the geopolitical tension in Korea investors are feeling more optimistic today. We’re seeing a reversal of the “flight-to-quality” trade with stocks higher and bonds lower. This is pressuring mortgage rates higher.
From a technical standpoint mortgage-backed bond prices appear to be at a split in the road. If rates close higher today and tomorrow I would expect the pattern to continue. Locking is the safe play.
Current outlook: locking bias