Mortgage note rates are unchanged this morning but the accompanying closing costs are modestly lower so in fact rates have improved.
News broke this morning that Standard & Poor’s (S&P) plans to downgrade the credit rating of a number of European countries including France. On the news interest rates in Europe have risen while yields here at home are benefit ting from a “flight-to-safety”. Back in December S&P announced that it had put 15 Euro-zone countries on watch for a possible downgrade so I’m surprised that this morning’s announcement is drawing so much of the financial market’s attention.
Here in the US the Commerce Department announced that the trade gap widened in our economy by more than expected in December as Americans continued to pay a high price for gasoline and demand from Europe waned. The inflationary pressure from imported goods remains tepid. Bad news for the economy and low inflation are both positive signals for mortgage rates.
Now that mortgage rates have reverted back to all-time low levels we need to be careful because consumers will soon pay .25%-.50% higher in loan fee or .125% higher in interest rate when they take out a conventional mortgage. Lawmakers chose to indirectly tax mortgages as a way to pay for the two-month extension of payroll tax cut and the aforementioned cost increase is the estimated impact. Most lenders will be implementing this “tax” in the coming days. I will shift my outlook to locking.
Current Outlook: locking bias