Mortgage Rates Begin Week at Records, Head Even Lower, June 28, 2010

Mortgage Rate Trend Direction Down

Economic Reports/Rate Impact Personal Income and Spending, 8:30 AM ET, Moderate Rate Impact

Key News G20 Meeting, US Financial Regulatory Reform Bill

Summary

Last week ended with rates at record lows. Markets Monday in Asia were mixed while European markets are up across the continent. Early US stock market activity is neutral to slightly positive. This morning we are seeing mortgage-backed securities (MBS) prices rise. Consequently, mortgage rates are likely to begin lower than the record levels from last Friday.

Impact of economic reports

A report on the Personal Income and Spending by consumers in the US was released at 8:30 AM ET. It showed that income and spending were in line with expectations. Income and spending both increased modestly. No impact on rates is expected.

The rest of the week is filled with a great deal of economic data. Tomorrow the Consumer Sentiment report will be released, while Wednesday the Chicago Purchase Manager’s Index. On Thursday several reports will be released including Initial Jobless Claims, Construction Spending, the Institute for Supply Management (ISM) Index and the Pending Home Sales Index. On Friday the key report of the week will be released: the Non-Farm Payroll Report. This report is the best gauge of whether our economy is creating jobs and on a sustainable path of growth. Better job creation will likely increase mortgage rates, while continuing weakness in job creation will likely keep mortgage rates down.

Impact of international or political events

The G20 meetings in Toronto over the weekend provided evidence that European countries are serious about reducing their debt. Comments by US President Barack Obama also indicated a commitment to reducing deficits as well. The question going forward is how the reduction in spending by the major economies around the world will affect economic activity.

On the US political front, the death of West Virginia Senator Robert Byrd has brought into question the passage of the Financial Regulatory Reform legislation. If Senator Byrd’s death results in the bill having to be revisited, it could impact mortgage rates.

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Loan Type	Today	+/-
30 yr fixed	3.72
15 yr fixed	3.03
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