The note rates on mortgages are unchanged this morning but the associated closing costs are slightly lower.
Mortgage rates improved on Friday following the weak jobs numbers. Over the weekend there was a lot of talk about the debt ceiling and the possibility of a US default if lawmakers cannot agree on spending cuts and/ or tax hikes. Although there is likely to be a lot of media coverage the markets currently believe there is an infinitely small chance of a default.
Although the US is unlikely to default investors are growing more and more concerned that Italy and Spain may. This development is driving the Euro lower and encouraging investors to seek “safety” in US-denominated debt securities, including mortgage-backed bonds.
The 10-year Treasury note is now trading back under 3.00% which is seen as an important psychological level. Speaking of US Treasuries $66 billion of new supply will be auctioned off this week so we’ll need to monitor demand.
The meat of the weekly economic calendar comes Thursday-Friday so in the meantime we’ll be watching Europe and stocks for direction.
Current Outlook: floating