Category: Rate Update

Although mortgage note rates are unchanged from last Thursday pricing has improved so in fact the overall rate environment is better to start the week.

Greece is back in focus for the financial markets today.  Although Greece is not yet technically in “default” they are teetering on the edge.  Negotiations between Greece and its creditors have broken down just 24 hours before the ailing country is scheduled to make a 1.6€ billion payment.

Greece has implemented strict capital controls in order to keep its financial system from crashing.  The Greek stock market is closed, bank branches are closed, and ATM’s are open but Greek citizens are limited to withdrawing 60 euros per day (~$67).

The chaos in Greece has ignited a “flight-to-safety” in the financial markets.  As I explain HERE this is a good sign for US mortgage rates.

For the time being mortgage rates will likely respond to developments in the Greek saga.  However, it is a very busy compressed economic calendar this week (the financial markets are closed on Friday).

In housing news the National Association of Realtors reported that pending home sales hit a 9-year high last month.  Tomorrow S&P will release the latest reading on the Case-Shiller Home Price Index.

It’s jobs week so we’ll get the ADP, initial claims, and the all-important jobs report later in the week.  We will be keeping a close eye on wage growth in this Thursday’s jobs report as that is the missing piece of the inflation puzzle which will force the Fed’s hand in raising rates.

Current Outlook: floating

Mortgage rates are unchanged from last week but are trending in the wrong direction this morning.  Last week mortgage rates caught a break from their upward trend that had been established a few weeks ago.  The break was as a result of renewed fears over the Greek financial crisis.

Those fears are unwinding this morning as reports out of Europe suggest that Greece and its creditors may be close to a deal that would prevent a default.  This is a very fluid situation so sentiment can change in a heartbeat but for now it appears that mortgage rates may firm up due to reduced fear surrounding the Greek situation.

There was a great housing report from the National Association of Realtors (NAR) released earlier today.  The report showed that the number of existing home sales in the US increased by 9.2% from last year (+9.0% in the west).  The number of home sales has now increased for eight consecutive months.  In the west the median home price rose by 10.2% from last year.

Looking ahead, on Tuesday we’ll get figures on new homes sales, on Wednesday we’ll get a report on US Gross Domestic Product, and on Thursday we’ll get the Fed’s favorite gauge of inflation (Personal Consumption Expenditure price index).

Last thing, in case you missed it the Consumer Financial Protection Bureau announced a two month delay on the implementation of their new mortgage disclosure regime known as “TRID” (TILA-RESPA Integrated Disclosure).  The new disclosures were scheduled to begin with new loan applications started on August 1st and now it will be October 1st.

Current Outlook: locking

Mortgage rates are unchanged from last Monday.

The financial travails in Greece are back in the headlines this morning.  Over the weekend talks between Greece and its creditors broke down.  Greece is supposed to pay the International Monetary Fund a 1.6 billion euro payment by the end of June.  There is growing speculation that they will not meet that obligation which could throw Greece’s financial system into chaos.  The fear is that contagion will spread to other European Union countries such as Portugal, Italy, and Spain.  That fear contributes to a “flight-to-quality” that helps US interest rates.

International markets are helping US interest rates remain low but the domestic picture is less certain.  We know that the recent employment numbers have been fairly robust and that wages are rising in the US.  Assuming this trend continues the Fed will need to raise short-term interest rates in order to curb inflationary pressure.  That said, there is growing skepticism regarding the outlook for the economy.

This morning’s report on manufacturing and capacity utilization showed continued weakness in the manufacturing sector of the economy.  This is likely a consequence of a stronger US dollar and lower exports.

Later this week we’ll get the Fed’s latest monetary policy statement (Wednesday).  The Fed is not expected to raise short term interest rates this week but they may provide clarity on when they intend on starting that exercise.  On Thursday we’ll get the Consumer Price Index from the Labor Department which will reveal whether inflationary pressure is growing.

We’ll begin the week by floating to see if there is any follow through regarding the Greece storyline.

Current Outlook: floating