Mortgage Rate Update May 22, 2017

Happy sunny Monday!  As you soak up rays this week you might be interested to know that sunlight travels 93 million miles from the surface of the sun to the surface of the Earth in 8 minutes and 20 seconds (all to be blocked by sunscreen).

Do you know what else goes fast?  Housing inventory.  This week’s economic calendar contains fresh housing data which we expect will affirm low inventory and continued price appreciation.  Tomorrow we’ll get new home sales and on Wednesday we’ll get the FHFA housing price index and existing home sales.  If you know someone waiting for a “better time” to buy they may be waiting a long time (and chasing prices).

Fresh housing data out this week is expected to affirm low inventory and price gains.

Mortgage rates improved last week and are back down to the most attractive levels since the beginning of November.  Will they continue to improve or reverse higher?

The answer to this question may lie in the minutes from the last Fed meeting which are scheduled for release on Wednesday.  As I wrote about HERE financial analysts are very curious about if and when the Fed plans to unwind the nearly $4.5 trillion of mortgage and treasury securities currently on its balance sheet.   The additional supply of debt would almost certainly put upward pressure on interest rates.

Speaking of debt, the US Treasury is scheduled to auction a fresh supply of 2-year, 5-year, and 7-year notes this week.

From a technical perspective momentum is on our side but it looks like tough sledding for interest rates to improve further.  There is significant technical resistance which will present a challenge for rates to improve beyond recent lows.  I am going to recommend locking.

Current Outlook: locking

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