Rate Update November 22, 2010

Mortgage rates are unchanged from Friday.

Mortgage-backed bonds (MBS’s) are currently trading higher on a flight-to-safety trade sparked by concerns over sovereign debt.  Over the weekend Ireland took formal steps to accept a bailout from other European nations.  This morning analysts are concerned that other European countries may follow suit prompting investors to buy into “safe” US Treasury investments.

The US Treasury will auction $35 billion in 2-year notes later today, the first of 3 auctions that will total $99 billion.  In light of the news out of Europe we expect demand for these auctions to be strong which is good for mortgage rates.

The economic calendar gets busy tomorrow.  The long-term trends suggest locking.

Current outlook: locking