Mortgage Rate Update May 31, 2012

Mortgage rates have created new all-time low levels today.

What is driving rates lower?  A global flight-to-safety where investors are repositioning capital into the perceived “safe-haven” of the US.  The added demand for our debt securities, including mortgage-backed bonds, has driven US interest rates to all-time low levels.

Uncertainty persists in Europe.  Earlier today Spain & Italy saw yields on their government rise on concern over their financial systems.  Greek’s future in the Euro-zone is still in question and officials have yet to propose a credible plan to curb contagion.

Has the uncertainty in Europe impacted the US economic recovery?  Data out today suggests that it has.  Weekly jobless claims rose for the 4th straight week and a jobs report released by private payroll provider ADP suggests that hiring cooled in May.  Tomorrow the all-important government jobs report will be released.  Expectations for the results are fairly low so unless the data shows significant job growth I expect rates to remain at all-time low levels.

Current Outlook: floating