Rate Update January 20, 2010

Mortgage rates improved again this morning.

The markets are experiencing a “flight-to-quality” this morning in response to weak economic data and bearish news out of China.

The Labor Department reported earlier today that price pressures at the wholesale and manufacturing level of our economy remains weak; especially when you exclude volatile food and energy prices.  This news is not entirely surprising since consumer demand & business investment remains  sluggish but nevertheless is good news for mortgage rates.

China announced overnight that they make take steps to tighten credit in their economy.  Many analysts were looking for China to lead a global economic recovery so this news is not welcomed.  Their announcement is causing investors to reallocate money into “safer” investments including mortgage-backed bonds (MBSs).

Current outlook: locking