Existing home pending sales rise to a six month high nationwide thanks in part to mortgage rates being low. However, the mortgage rates are tied to the 10 year bond and investors are moving toward higher yields in Europe according to Frank Notehaft at Freddie Mac.
Existing pending sales may have jumped a staggering 10.4 percent in October, the strongest pace since April of this year, but interest rates are on the rise. According to Frank Notehaft, chief economist for Freddie Mac, investors moved from U.S. Treasury debt to European markets — where improvements are being made to the debt crisis. This in turn caused “bond yields to rise and mortgage rates along with them,” he says.
via Realty Times – Real Estate Outlook: Existing Pending Sales Rise.
Richard Moroscak, a Senior Lending Officer at Monarch Bank, in his weekly mortgage status report states that:
It is year-end on Wall Street and investors like everyone, are generally distracted by holiday events and administrative tasks aimed at cleaning up balance sheets. The effect is less participation in the bond market and increased volatility. Mortgage lenders have year-end activities as well and they impact loan pricing. Lenders are reluctant during the holiday season to get aggressive with mortgage rates. This slows loan production and gives the operations staff and management a chance to prepare for a new year. Everyone expects Rates to come back down in the New Year.
Hopefully, rates will go lower again in 2011 and existing home sales will continue the upward trend.
