Rate Update May 20, 2010

Mortgage rates priced slightly better again this morning.

Mortgage rates are now at the lowest level since August of 2009 making it a great time to buy a home or lock in a rate on a refinance.

Why are rates so low?

As the WSJ reported this morning inflation is at a 4 decade low.  Inflation is the primary factor that drives mortgage rates so mortgage rates are benefiting.

Furthermore, investors are growing more and more concerned about Greece and the repercussions of a Greek default.  Following yesterday’s unilateral move on the part of Germany the EU looks divided.  It will certainly take a coordinated effort on the part of all EU countries to fix the debt crisis.  This growing fear is further sparking the flight-to-quality trade which has helped drive yields lower in the US.

Current outlook: neutral