Mortgage rates are worse again this morning.
Mortgage backed-bonds (MBS’s) are trading significantly lower for a 4th straight day. Since the open of trading on Monday morning MBS’s have fallen by 140 basis points pushing mortgage rates higher by about .25%. What’s causing this?
If you’ll recall back to the beginning of June mortgage rates touched 7-month lows when uncertainty peaked regarding Greece’s debt problems and economic data was weak.
Fast forward to this week. Earlier in the week investors were unwinding “flight-to-safety” trades in anticipation of Greece’s passing of additional austerity measures which was required for them to avoid default next month. Less uncertainty exists.
And now, interest rates are moving higher on better than expected economic data. A report out this morning showed that economic activity in the Chicago region was much better than anticipated. This follows similar results from the Philadelphia & New York regions that were posted last week. Yesterday the National Association of Realtors report better than expected pending home sales which has provided some hope for the sluggish housing market.
Current Outlook: locking bias