Sacramento Mortgage Rate Update

The benchmark 30 year fixed rate mortgage climbed  higher again this week, ending at 6.125% with 1 point.

Behind the Numbers

The week was a bag of mostly positive economic news, further eroding hopes of a Fed rate cut anytime soon.  After briefly crossing 4.9% for the first time since August, the 10–year Note yield closed at 4.879%, up from last week’s close of 4.773%.  (bad for rates)

The week’s news led off with an increase in the index of leading economic indicators, a sign that the economy may be picking up steam (again, bad for rates). 

Thursday, existing homes sales dropped slightly, but that news was overshadowed by a median price figure that held its own and a drop of nearly 8% in existing home inventories.  This prompted  Davi Lereah, chief economist for the NAR to comment, “It appears we have established a bottom.” (not great for rates)

Orders for Durable Goods rose in December as well, showing a manufacturing sector recovering from a soft patch this Fall.  (sort of bad for rates)

December new homes sales jumped by 4.8%, the highest seasonally adjusted rate since April of 2006, and at the same time November’s figures were adjusted higher.  New home sales have now increased 4 out of the last 5 months, a dramatic turnaround from the weakness in the first part of the year.  (pretty bad for rates)

The mid-week U.S. Treasury auction of 50–year Notes met with adequate overall demand, but participation by foreign banks was surprisingly lackluster given the recent rise in treasury yields.   The possibility that foreign banks may at some point redirect some of their investment away from U.S. Treasuries is an often cited interest rate fear.  Such a move would require an increase in Treasury yields (and mortgage rates) to convince foreign investors to continue loaning us money.  (really bad for rates).  

Thinking of refinancing?  Don’t wait until rates rise further.

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