California Mortgage Rate Update: 02/21/12

 

 

 

The holiday shortened week starts off with the news that Greece has been granted another round of bailout funds.  This is good news on the surface, but few sense this is the last we've heard on the topic.  As for mortgage rates, good news for Greece tends to be bad news for rates (mortgage rates higher).

This week we will also have Treasury auctions of 2, 5 and 7-year notes.  In this case, good auction results (i.e., strong demand) means lower interest rates, though poor demand would be a catalyst for intra-day rate increases by mortgage lenders.  Watch these throughout the week if you're on the fence about a float or lock of your interest rate.

Two other things worth noting:

1)  The Dow hit 13,000 today.  Generally speaking, higher stock markets equals lower bond markets.  Lower bond markets equals higher rates. 

2)  I hear a lot of people complaining about gas prices.  Don't disregard these long-term.  Higher gas prices has, of late, signaled tougher economic conditions for many, which has resulted in more stimulus from the Government and thus lower rates.  It's a convoluted and indirect chain of events, but we've repeated it several times since 2008.

Lock advice:  After a string of historic lows, last week saw slightly higher rates.  I expect this trend to continue this week.  My advice is to lock what you've got if your closing is within the next 30 days.  Beyond that, I'm inclined to think rates will again fluctuate downward for brief periods of time.  There is nothing happening this week that logically favors floating for better rates.

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