Most mortgage rates are unchanged this morning.
Mortgage-backed bonds (MBS’s) continue to trade sideways up against stiff technical resistance. I continue to believe that it would take an unexpected event for mortgage rates to move substantially lower.
Interest rates have benefited over the past week from renewed concerns over Greece’s fiscal health. They have yet to come up with a credible plan to solve their problems. As a result investors around the world have pursued “safer” investments which helped yesterdays’ 7-year note auction by the US Treasury as well as mortgage-backed bonds (MBS’s).
On the economic front existing home sales were reported weaker than expected for January. The report is raising concerns over the housing recovery ahead of the expiration of the homebuyer tax credit. Furthermore, although GDP growth showed strong gains last month the consumer spending component was weaker than expected which has analysts concerned over the pace of an economic recovery. Fortunately the inflation component also showed slow gains which should help long-term interest rates remain low.
For now I am favoring a locking position given that I don’t believe mortgage rates will get substantially better but there is plenty of room for them to get worse.
Current outlook: locking bias