Five-day Wall Street slide, poor economic reports keep rates low

A five-day slide on Wall Street and a slew of disappointing economic reports kept buying of U.S. Treasury securities on an even keel. Funds moved out of stocks and into the safe haven of Treasuries, keeping prices up.

Several Fed officials also spoke this week but none suggested that interest rates would be hiked anytime soon. This reassured traders, who continued to buy. Positive activity in the Treasury markets had a positive effect on prices and yields stayed low. This allowed mortgage rates to remain at attractive levels.

Rates have been steady and low for the past three weeks. The 30-year, fixed-rate mortgage (based on zero discount points) is holding above 5.375 percent, while the 15-year, fixed-rate mortgage is just below 4.75 percent. The introductory rate on the one-year, adjustable-rate is hovering at 3.5 percent.

Mortgage applications for the week ended Feb. 20 rose yet again, thanks to low mortgage rates. The Mortgage Bankers Association reported that purchases climbed 2.3 percent, and refinances were up 1.9 percent.

Home sales came in far below expectations, due in part to the bone-chilling cold that blanketed parts of the nation in January. Existing-home sales, which account for 85 percent of single-family home sales, fell 5.2 percent to a still healthy 6.04 million units.

New-home sales declined 1.7 percent to 1.106 million units -- the lowest level since May.

December numbers, however, were revised from a 5.1 percent drop to a 1.3 percent gain. Consumer confidence dipped nine points with concerns about jobs weighing on those surveyed. Durable goods orders in January fell by a steep 1.8 percent. The business-spending component, however, rose substantially, putting slight pressure on Treasuries.

March begins with news on manufacturing, construction, productivity, factory orders and the all-important employment report for February. Analysts appear to have backed down from predictions of big additions to nonfarm payrolls, and this could keep the report from having a big impact on the financial markets.

There are a lot of data forthcoming. If they come in near expectations, buying in Treasuries should be steady enough to keep mortgage rates near present levels.

Interest.com is a national publisher of mortgage rates and information.

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