Stability for 3 days. YEA!! The 10 year bond - the main competition for mortgage backed securities, broke through a major support level on Wednesday making us wonder if we we're on track for new record lows. Instead, the bond has stuck right at its 1.90% major support level, supporting our 4% mortgage rates. This is as much stability as we've seen in months. Freddie Mac's rate survey showed a new record low rate of 3.94% for this week BUT it increased the survey points from .7 to .8%. As we all know, increasing the points increases the yield, so the record low rate isn't the real record low mortgage rate but it is very close. We are right at the historical bottom for rates.
The US saw good news on the unemployment front as new claims dropped but instead of signaling new job growth, it signaled a reduction in layoffs. While not the best cause for the drop, it's still better than all the other alternatives. The Wall Street Journal and Bloomberg are both reporting that on European front, Fitch Rating Services reported that a comprehensive solution for the European crisis is "beyond reach" and has warned of a potential downgrade for many European economies. A potential or actual downgrade would mean higher rates for their debt and that of course, would increase the problems and prolong the crisis. We can hope they are overstating their case.
The US Senate decided it wanted Christmas break more than it wanted to play politics and passed a $1 trillion deficit budget. That will keep the government running and allow the Senate to go home. The House is also happy since they won't have to come back on Monday.
Barring any big news out of Europe and with Washington going home, we can expect a low volume, quiet week next week in the markets with mortgage rates slowly climbing as we approach weekend as investors hedge their positions before taking a long holiday.
Have a good weekend and we'll talk next week.
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Colorado Capital Mortgage Co, LLC | 2425 Canyon Blvd Ste 110 | Boulder, CO 80302
Phone 720.833.7964| Cell 303.885.1532| Fax 855.387.7240
An Affiliate Of Wells Fargo Home Mortgage