Mortgage Rate Update May 9, 2012
Mortgage rates are mostly unchanged this morning.
Rates remain at all-time lows levels as uncertainty continues to swell in Europe. In Greece, the leftist party leader Alexis Tsipras, who is attempting to build a coalition government, is expected to send a letter to EU leaders renouncing required austerity measures. As I began writing months ago Greece is going to default on their debt. Analysts suspect that this would likely result in Greece exiting the European Union and creating all sorts of unpredictable circumstances.
The European financial system would likely survive Greece leaving the Euro-zone but what analysts are concerned about are ripple effects. Will citizens in Spain & Italy also protest austerity cuts to the point where those countries are forced to default and/ or depart the EU?
Fear over the eventual outcome in Europe is driving global capital into the US via the “flight-to-safety” trade and pushing long-term interest rates to all-time low levels. Problems of this magnitude don’t get solved over night so it would seem borrowers don’t need to rush into locking. However, we are in uncharted territory. Rates have only been this low a handful of times in our history so it is tough to think that rates could get much better.
Current Outlook: floating