Mortgage rates created new all-time lows last week.
Interest rates here in the US continue to be driven lower by an ongoing “flight-to-safety” (Click HERE to learn about this concept). Investors are being driven in this direction by ongoing dears over the European debt crisis as well as signals that economies around the globe are slowing.
Regarding the EU debt crisis focus has shifted away from Greece and is now on Spain. The Spanish banking sector is saddled with non-performing loans and will need a bailout from the Spanish government and/ or the European Central Bank.
Until now Germany has shown little interest in approving a Euro-wide bond issuance in which stronger countries (i.e. Germany) help guarantee the repayment of the bonds for cash-strapped countries (Greece, Spain, Italy, & Portugal). Should they shift their position on this issue it would likely cause rates to move slightly higher.
In case you missed it last Friday’s all-important jobs report showed that the US economy created a dismal 69,000 jobs in May, much less than was anticipated. The uncertainty & austerity measures in Europe are clearly having an impact around the globe. Bad news for the economy is good news for mortgage rates.
From a technical perspective mortgage rates appear ripe for reversal. I expect rates to take a break from moving lower this week and possibly even reverse a tad higher.
Current Outlook: locking bias near-term, neutral long-term