San Diego Mortgage Rates Update: 12/28/2009

San Diego mortgage rates increased last week with most lenders hovering around 5.00% on a 30 year fixed mortgage for well qualified borrowers. Keep in mind that during this time of year lenders are not setting their rates under normal guidelines. There is a seasonal adjustment that affects borrowing costs during the holidays so even if bond prices increase lenders probably won’t lower mortgage rates until after the new year. Remember that under normal market conditions, as bond prices rise interest rates fall.

Rates remained unchanged after the Treasury Department’s $118 billion bond auction today. Demand was somewhat weaker than expected raising continued concerns of higher interest rates in 2010. Market participants look at the demand for our bond auctions to gauge its success or failure.  So far this demand has been strong especially from countries like China and Japan. This has helped keep San Diego mortgage rates near the historic low levels that they are today. In order to keep rates from rising we’ll need to see continued strong demand at these bond auctions.

Again, due to the season, this week won’t have much economic data affecting rates. Tomorrow the monthly home price index will be reported along with the consumer confidence report and on Wednesday we’ll see the jobless claims report. Most lenders are posting 30 fixed rates from 5.00% to 5.25% for the well qualified borrowers. Check back frequently for news that affects San Diego mortgage rates.