Mortgage Rate Update January 31, 2012

Mortgage rates are unchanged this morning.

Interest rates looked like they may worsen yesterday afternoon after European leaders agreed to a new fiscal pact which includes tighter measures on member state’s budgets and a new round of bailout money.  However, this morning interest rates have stabilized on renewed concerns over Portugal and the US economic recovery.

A lack of a deal between Greece and its creditors has investors concerned about the financial health of Portugal.  Yields on Portuguese debt rose sharply this morning which helps create demand for US-denominated debt securities including mortgage-backed bonds.

In economic news, consumer confidence fell sharply in January according to new data from the Conference Board.  This has investors worried about consumer spending in the coming months.  In housing the S&P Case Shiller-Home Price Index showed that home prices continued to fall around the nation as of November.  The year-over-year 20-city index fell by 3.7%  and in Portland home prices fell by 4.8%.

I am going to shift to a locking bias since rates are back at all-time lows and its expected that Greece will reach a deal with creditors later in the week.

Current Outlook: locking