Mortgage Rate Update July 20, 2011
Mortgage rates are slightly better this morning.
It’s a new day but same story line. The markets are largely ignoring economic data and focusing on the debt-ceiling & Europe.
A sense of optimism has emerged regarding the US debt-ceiling in response to the President backinga proposed plan put forth by the so-called “gang-of-six”. The initial plan has yet to pass either chambers of Congress and therefore still has a long ways to go.

As I’ve stated previously the consequences of a US default would be catastrophic and therefore I fully expect the debt-ceiling to be raised in time. The only question is when? and what strings will be attached.
Euro-zone officials will meet tomorrow in Brussels to try and hammer out a plan to save the continent from financial contagion. Only a couple weeks after a second round of bailout funds were approved for Greece renewed concerns over the stability of multiple Euro-zone countries has created a “flight-to-safety”, which has pushed rates in the US to near record lows. Should the summit produce a credible plan I would expect rates to react higher. However, this is a tall task for EU officials.
The National Association of Realtors reported earlier that existing home sales declined last month for a 3rd straight month. Analysts had been expecting a modest increase so the news is worse than expected but the markets are largely ignoring the news.
Current Outlook: neutral