Mortgage Rate Update March 18, 2013

Mortgage rates are better this morning on renewed fears over the European debt crisis.

Over the weekend the small European country Cyprus made big headlines when it was announced that banks inside the country would tax depositors as a way to raise funds to bailout the financial system.

Practically speaking the impact of this policy will not have a huge impact on the global economy but investors fear that larger economies like Italy, Spain, and Greece could follow suit which would be more significant.

As a result, US interest rates are benefiting from a flight to safety as investors sell riskier assets in favor of “safer” ones (i.e. US denominated debt securities).

The Federal Reserve open market committee will meet for its regularly scheduled 2-day meeting starting tomorrow with a monetary policy statement due out Wednesday.  We’ll be listening closely for any clues as to when and how the Fed will unwind its existing accommodative monetary policy.  The explicit the Fed is the more likely it will be for rates to be pressured higher.

The rest of the economic calendar is relatively light this week.  I would recommend locking in at these improved rates.

Current Outlook: locking