“There was a 7-year Treasury Note auction yesterday that was a little bit stronger than expected. Despite that encouraging news, Mortgage backed securities fell…” So, what the heck does that mean?? Looking at this chart of the 10 Year Treasury Bond (which is really our Government Bonds that people and Institutions purchase… you can see that we are at or near as low as we were a couple of weeks ago. Mortgages trade on the Bond Market – and are called MBS (Mortgage Backed Securites). Currently – 30 year mortgages follow the 10 yr TBill “pattern.” When the TBills go up… rates go up – when they go down GENERALLY rates will go down.
When the Mortgage Backed Securities are “off” or “down” – you’d think rates would be DOWN… but NO! That’s trader talk for rates are moving HIGHER! Are you confused yet?
The News and Observer (our local paper) ran a huge story today that rates are at their lowest point and you should refinance… well, they are “almost” at their lowest point. We actually were lower for a couple of days at the end of May… but it’s still a good time to consider a refinance if your rate is adjustable, or you’re at 6% or higher.
So which direction are mortgage loan rates in North Carolina headed? Data today started off with the GDP report. Real GDP was reported at 2.7%, just below expectations of 3.0% and the GDP Price Index was reported at 1.1%, just above the 1.0% expected. Overall, a fairly benign report.
Consumer Sentiment was released as well this morning and was reported at 76.0, slightly above expectations of 75.5 and up from the 75.5 in the last report. Some Economist believe that this rise in Consumer Sentiment means that the high levels of Jobless Claims may be a result of some “special factor” (like the Gulf Oil) and not due to actual deterioration in the labor market. That kind of thinking aims at a continued economic recovery and a better jobs picture than has been presented with its respective data.
What does this mean for North Carolina Mortgage Rates? Mortgage rates have been trading in a “range.” Although the day to day movement is very volatile… the long-term outlook is not perfect for even lower mortgage rates, so you really need to watch the 10 year TBill (look at the chart – every time we hit this low mark we pop back up!). We hit a mark below 4.5% for just about 48 hours. If that’s the mortgage interest rate you are looking for – call us, and get on our Rate Watch List. We’ll call you when (if) we hit “your” rate!
Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058 North Carolina Mortgage Lenders.