Record Low Mortgage Rates Continue

(Before It's News)

It’s a slow news day for the markets.  Outside of one lone report on consumer confidence, and an unofficial housing report, there is really nothing major for traders to use to base trading decisions.  Consequently, as I have warned many times, today could be a volatile “trading day.”

When traders have no solid directional plays to make based on economic data or even strong rumors their job is easy.  But when data or rumors conflict or have no clear direction they have a much harder job.  Remember most traders are paid regardless of whether the investment goes up or down. Even if they want to see investments move—they have to manufacture the momentum in one direction or another.  Consequently, days like to day can be volatile as the pushing and pulling battle is fought out in the pits.

What will the impact be on mortgage rates?  Hard to say which direction rates may move, yet the degree of any move is easier to forecast—not much.  If consumer confidence is an improvement from last month—which is expected—mortgage rates could tick slightly higher.  Moreover, if the Case-Shiller Housing Price Index is higher as is also expected, some momentum for higher stock prices could result which would hurt mortgage-backed securities and mortgage rates.

I have been critical of the Case-Shiller methodology in previous posts and won’t back off of that today.  The way in which this report treats sales data makes it very slow to recognize trends in the housing market.  It is possible, as other housing data suggest, that the housing market has hit a bit of a bump in the road on its way to improvement caused by the lack of supply of homes for sale in some markets.  The Case-Shiller report may miss this due to its use of longer-term averages rather than month to month data.  Additionally, the Case-Shiller focus on the top 20 housing markets by size, makes its findings of little use in hundreds of local markets across the country.

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