Daily Market Update 6/11/09

Mortgage rates were little changed Thursday in the wake of better than expected economic data. Retail Sales rose 0.5% in May, the first increase in 3 months, beating consensus forecast. Weekly Jobless Claims fell by 20,000 to 601,000, indicating the pace of job losses may be slowing. Stocks moved higher. The Treasury will auction $11 billion of 30-year notes this afternoon. Mortgage rates have now risen by 1% in the past 3 weeks. Concerns over the growing budget deficit have raised fears of future inflation among investors and frustrated Fed efforts to hold down long-term interest rates.


  1. Don, are we starting to see a return of the once mighty ARM? A couple of local lenders are now offering 5/1 at a rate that is well below the 30-year fixed.

  2. Alex,

    Thanks for writing. ARM rates have not been very attractive relative to fixed rates for some time now, but have become more enticing over the past three weeks as fixed rates have risen rapidly. This is primarily the result of investor fears over long-term inflation prospects. Shorter-term rates remain low as inflation will likely remain tame in the near term. That said, we have not seen any increased demand for adjustable rate mortgages. Fixed rates remain low in historical context and ARM’s have a badly tainted public image in the wake of the sub-prime crisis. ARM’s are a sensible option in some limited circumstances, but I doubt we will see a strong resurgence in their popularity any time soon.

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