Bond Auction Results Mediocre at Best, Mortgage Rates in a Holding Pattern
Today’s $31 Billion 7-year Bond Auction showed increased demand over yesterday, but the result was average at best – demand increased only when yields went up.
As the US Government increases its borrowing to cover the massive amount of new spending, we will very likely see demand for bonds decrease and average yield increase in response. This demand, of course, depends on the perception of risk in stocks and the likelihood of economic turmoil domestically or in other unstable economies (currently Europe, but who’s next?).
Side note: Let us know where you think the crisis in Europe is going – vote in our poll (on the sidebar) or give us feedback in the comments section below.
Mortgage rates are showing stability now, after spiking this morning; but the low rates that we have seen recently are unsustainable by the market for long; our prediction is still an upward trend in rates unless drastic changes in market forces are present.
In other news, Congressman Ron Paul has announced support for a third Homebuyer Tax Credit bill, making the credit permanently available to new homebuyers. The low mortgage rates of this past week are quite the incentive for prospective homebuyers – do you think that permanently adding an incentive tax credit will buoy the market, or simply exacerbate the larger problems plaguing our economy?
- Mortgage Pro Blog; Geoffrey Boyd; PrimeLending Clackamas OR