Mortgage rates are mostly unchanged from yesterday.
Yesterday’s auction of US Treasury 2-year notes was strong. The US Treasury received $3.14 in bids for each $1 being auctioned. High levels of demand conrtibutes to low yields across the yield curve so mortgage rates benefit as well.
Yesterday’s 2-year note auction carried an average yield of .77%. Which begs the question, who is buying 2-year investments with a measly .77% return? With short-term interest rates so low it’s likely that investment companies (i.e. hedge funds) are borrowing money at .25% and investing it to receive a return of .77%. The .50% spread can equate to a lot of money when it’s leveraged 10 to 1 but can also end in disaster if short-term rates rise.
Today the US Treasury will auction $42 billion in 5-year notes. In addition, the Fed will release minutes from their last monetary policy meeting. The market will be looking for any comments that didn’t find it’s way into the policy statement.
With rates below 5.00% for 30 year fixed mortgages we remain in a locking position.
In housing news, Standard & Poor’s released the latest Case-Shiller Home Price Index report. It showed that housing prices in Portland were 11% lower from a year earlier and had modest losses in the 3rd quarter for 2009. Click this link to view the report.
Current outlook: locking