Mortgage Rate Update July 27 2012 (What goes down must go up?)

I’m sure you’ve heard on TV or the radio that mortgage rates are down to historical lows. They are, but usually by the time interest rates hits the media, it’s obsolete information.

Today I’ve had several interest rate increases. The primary reason the rates dropped, have driven them up today. The US economy and Fed have an effect on rates, but lately it’s primarily been the news coming out of Europe and their economic malfunctions.

Starting in May the economic news coming from Europe has gotten worse. It started with Greece, and escalated to Spain and Italy. Today there was some speculation that new international bailouts may be put into place. As I’ve indicated many times in the past, rates go up faster than they go down.

Lets take a look at a chart of the 10 year treasury. It’s direction most closely correlates with 30 year mortgage rates. You can see how today the rate jumped almost 25 basis points. That’s is a huge jump to 1.55%.

We can see over a longer time frame how the rates have dropped consistently over the past 4 months, but today’s jump has broken the trend. Will the rates continue to go up? We’ll see what happens next week. On a technical level we’ll hit resistance at 1.6%. If it goes through that level, it’ll go to 1.8% or another 1/4% increase.

Is there any credibility to the new Euro bailout? We’ll see. Prior bailouts and agreements haven’t worked so far. The rates have been very news driven.

It’s been a moving target, but after this afternoons rate increases conforming 30 year fixed rates are running around 3.5% at 0 points, and the 15 year is at 2.875% at 0 points. They can back off next week, or jump up if the down trend is stays broken, and the Euro can get their act together. Plus the Fed may be adding additional stimulus to the system, pushing the rates and the stock market up.

If your loan is in process, hopefully you locked it already. If not you can lock it here, or continue to float, if you’re a gambler  , a little greedy and want to squeak out another 1/4. Realistically rates are still great.