Uncle Sam is back in the credit markets today looking to borrow $24 billion in the form of 10-year notes. Global investors are still pacing the floor as they try to determine whether the $1 trillion rescue package the European Central Bank hammered out over the weekend will be enough to quash the developing debt crisis for Greece and others. This uncertainty together with questions concerning the sustainability of the current stock market rally will likely be enough to induce decent "flight-to-quality" bidding at the government's 10-year note auction this afternoon. If this assessment proves accurate, the impact of this event on the current level of mortgage interest rate will likely be almost imperceptible.
FYI -- as they do every Wednesday, the Mortgage Bankers of America released their mortgage application index for the week ended May 7th earlier this morning. The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, rose 3.9% last week. The demand for purchase loans dropped 9.5% while refinance loan requests jumped 14.8% higher. The contract rate for 30-year fixed rate mortgages finished the week at 4.96% -- a value 6 basis-points lower than the prior week.
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