Mortgage and Consumer Confidence
Home Loan Rates and Consumer Confidence
February consumer confidence index was released this morning and it was not good for the economy but good for mortgage rates. The index dropped 11 points since last month. This comes at the heel of gains for three straight months. What made matters worse was that the expectation before the release was a drop of less than a point, so the outcome of this news caused the stock market to drop around 1%.
Let’s take a look at a chart of mortgage bond (FNMA 30-yr, 4.50%):
Remember that bond is inversely proportional to mortgage rate, which means that one goes up and the other goes down.
Notice how today’s bond price rose (the last green bar on the right-hand-side) after the consumer confidence index was announced.
As for the technical analysis of this bond action, the bond is hitting the resistance set by the 10-day and 30-day moving average. Also, a triangle formation is in place (two red lines) so the short-term trend is going to be determined by the direction of the break of this triangle formation.
Only 30% of a mortgage community says that they are advising their clients to lock-in the rate.
