Mortgage Rate Update May 23, 2012

Mortgage rates are unchanged this morning.

One day after optimism grew regarding the European debt crisis worries have sprung back into the market.  Late Tuesday evening former Greek Prime Minister Lucas Papademos told the Dow Jones newswire that preparations were being made inside the Greek government for a Euro-zone exit.

To reiterate what I’ve stated many times here on ‘rate update’ Greece leaving the EU is not the worry.  The worry is if in doing so they create contagion that spreads to Portugal, Spain, and Italy.  This fear is causing a flight-to-safety which has created all-time low interest rates here in the US and Germany.


In housing news the Commerce Department reported that new home sales increased by 9.9% from a year earlier in April.  Furthermore, the Federal Housing Finance Agency reported that home prices rose by 2.7% from a year earlier in March.

The direction of interest rates will come from breaking news out of Europe.  I don’t expect any significant breakthroughs but with EU officials meeting in Brussels and comments to reports could shift the markets.

Current Outlook: neutral