Mortgage rates are basically unchanged from last Thursday. They actually worsened slightly on Friday following the release of the all-important jobs report then improved slightly this morning.
It’s been awhile since we’ve mentioned the European debt crisis as a factor in directing mortgage rates but this morning that is exactly what is taking place. Interest rates are benefitting from renewed fears over the political climate in Europe. Spain’s Prime Minister is facing calls for resignation from an opposition party. A shake-up in the government there could push them back on the path to default.
Furthermore, former Italian Prime Minister Silvio Berlusconi has performed well in polls as of late promising to eliminate some of the taxes. The fear is that is elected and tax cuts imposed Italy would also be put back on a path towards default. Bad news for Europe is good for US interest rates.
The US economic calendar is fairly light this week so we’ll be paying close attention to technical trading patterns and stocks. With rates improving modestly this morning I would recommend a locking bias.
Current Outlook: locking bias