Pricing on mortgage rates are slightly improved this morning.
Anxiety over the European debt crisis rose this morning causing yields on Italian debt to rise to the highest level in 14 years. Higher rates in Italy are an ongoing signal that investors are disappointed with last weeks European summit which produced a treaty that many believe is not bold enough to contain the crisis.
In a speech to German lawmakers Chancellor Angela Merkel reiterated that a Euro-zone bond issue was still not on the table. Such an initiative and/ or an escalation of bond purchases by the European Central Bank are widely regarded as the only credible solution at this point and would also likely trigger mortgage rates to move higher here in the US.
For now, uncertainty in Europe continues to benefit interest rates here in the US as the 10-year Treasury note has fallen back below 2.00%. The US Treasury will sell $13 billion in 30-year bonds later today. A strong auction is expected which bodes well for mortgage rates.
I will remain in a neutral position.
Current Outlook: neutral