A weak Italian debt auction earlier today triggered another wave of “flight-to-quality” buying of U.S. dollar denominated assets like Treasury debt obligations and mortgage-backed securities.

The credit market rumor mill is alive with chatter Standard & Poor’s is set to downgrade several euro-zone countries’ debt rating. Nobody seems to know which countries’ are on the list. Until these rumors are either proven accurate – or officially dismissed — global investors are virtually certain to stay in their financial foxholes with their helmets on and their heads down. The immediate impact of this circumstance is supportive of the intraday prospects for steady to perhaps fractionally lower mortgage interest rates here at home.

Looking ahead to the coming holiday shortened week the entire battery of scheduled economic news is expected to be generally mortgage interest rate neutral. The Commerce Department will release its December Producer Price Index figures on Wednesday and will follow-up with the release of the December Consumer Price Index data on Thursday. Both measures of inflation pressure within the economy are expected to be non-threatening in terms of the current trend trajectory of mortgage interest rates. The National Association of Realtors will release their December Existing Home Sale figures on Friday — expected to show a 4.0+% gain for the month. The improvement in the pace of existing homes sales during the last month of the year is broadly anticipated by mortgage investors and is fully priced into the current level of mortgage interest rates.

FHA

30 year fixed 3.75%

Conventional

30 year fixed rate 3.75%

15 year fixed rate 3.25%

5/1 ARM 2.875%

7/1 ARM 3.125%

For all your Mortgage questions, contact Bob Strandell.