Rate Update October 6, 2009

Mortgage rates are unchanged from yesterday.

Stocks are rallying and the US dollar is weaker this morning thanks to news out of Australia that they have increased short-term interest rates.  How does Australia raising rates impact markets in the US?

First, by increasing short-term interest rates Australia is signaling that they are unwinding stimulus to their economy which is a sign that their confidence about an economic turn around has grown.

Second, short-term Australian investments such as short-term notes and CDs now appear more attractive to the global investment community.  As a result there will be less demand for US-denominated assets which has pressured the US dollar lower.  In fact, gold is now trading near all-time highs at $1,040/ ounce.

Both of these factors are not favorable to interest rates.  We remain in a locking position with rates at all-time lows.

Current outlook: locking