Nashville Mortgage Rates Update – 1/17/12

Nashville Mortgage Rates

This week of course, it is still mostly about Europe, the saga that won’t go away, and not likely for years.  Treasury rates ended last week at 1.87%.   Mortgage rates continue to decline in the MBS market, but lenders that buy the loans have not been pricing to the MBS market, holding prices lower than the market itself.  The increased “guarantee” fees to fund the 2% Social Security tax cut (financed by home buyers and refinancers) is causing disruptions in pricing.  Some lenders have used the fee increase to increase gains from originators by setting prices much lower than MBS markets trade—over and above making the prices adjustments for the fee increases.

This week a few key economic reports that will get traders’ attention: the PPI, CPI, Philly Fed business index, housing starts and permits as well as December existing home sales and weekly jobless claims are all on tap.  U.S. interest rate markets continue to to hold well, at the same time the long end of the yield curve including mortgages is struggling to keep a positive bias.  Europe’s travails and this week’s economic data should define whether interest rates will move lower.  That said, with rate increases due to Congress using Fannie, Freddie, and FHA to finance the social security tax cut, Nashville mortgage rates are not likely to fall much more, even if U.S. treasury markets improve somewhat.  We remain skeptical on the longer term outlook for rates, as rates are likely to increase a little this year with the economy improving.  The wild card now is the Fed (Europe is always a wild card on a day-to-day basis); last week there were some who were floating the idea of another easing move from the Fed, still a minority view however.  On the 24th and 25th the FOMC meets, and likely there will be discussions on the subject.

More Nashville Mortgage Rates Updates coming your way- stay tuned!