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Mortgage Rates Improve On Poor Consumer Confidence

Posted by: RateAPY Bank Rates News
February 23rd, 2010

It is a bitter sweet fact that mortgage rates usually improve on bad economic news. Mortgage rates come from the sale of mortgage backed securities (MBS), which are fixed income products. Demand for fixed income products, like U.S. Treasury bonds, often increases when investors feel the economy is is trouble.

Consumer Confidence Plunges, Helping Mortgage Rates

Consumer confidence fell sharply in February, down 10 points to 46.0. The present situation hit a 27-year low and future expectations are back to the lows of last July. Some analysts point to the extreme weather as part of the cause. Overall, the numbers are hugely disappointing as consumers clearly see their problems as long term. Germany’s confidence numbers also came out bad, reflecting similar feelings across the pond.

Investors began selling from the stocks and moving to safer positions in fixed income. MBS sales gained, causing an improvement in yields and, as a result, better mortgage rates.