US stock market rally pressures mortgage rates higher
Think owning Portland real estate is a great investment? Try purchasing a professional sports franchise.
The late Paul Allen purchased the Portland Trail Blazers in 1988 for $70 million. According to recent reports the Trail Blazers franchise is currently worth $1.6 billion.
Ignoring annual cash-flow the team has appreciated at a 10.6% annualized rate over that time (which outperforms housing).
The Blazers will try and outperform their 1st round opponents tonight at the Moda Center and advance to the 2nd round of the NBA playoffs. Go ‘zers!
Home loan rates have been trending modestly higher since the end of March. They have increased .125%-.25% which is not a surprise given that during that time the yield on the US 10-year treasury note has increased from 2.37% to 2.57% (+.20%). Mortgage rates tend to track changes in the the 10-year treasury note yield.
The US 10-year treasury note has been trading at its 50-day moving average for the past week. The technical signals suggest that bonds are oversold which means that yields may improve in the coming days.
That said, if yields break above this level then mortgage rates are likely to worsen by another .125%-.25%.
Much of the reason interest rates have suffered during the month of April is because the stock market has been rallying. Strong earnings from various companies have pushed investors into stocks and US indexes are now hovering near all-time highs.
The Week Ahead
The remainder of the week is relatively light on economic news so I expect markets to react to technical signals. Given that momentum is working against us I think the safe play is to lock so will remain with that bias. That said, I am hopeful the aforementioned technical levels can help interest rates improve.
Current Outlook: locking bias