Mortgage Rate Update August 20, 2012

Mortgage rates are unchanged this morning.

As European leaders return from summer vacation I expect the European debt crisis to gain more attention in the financial headlines.  Over the weekend a German newspaper reported that the European Central Bank (ECB) was prepared to announce a plan to support the yields of peripheral EU countries.

WITH EUROPEAN LEADERS RETURNING FROM VACATION I EXPECT THE DEBT CRISIS TO COME BACK INTO FOCUS.

Any credible plan would likely cause US interest rates to continue to rise.  However, the ECB dismissed the report this morning.

The US economic calendar is fairly light this week so unless any developments arise out of Europe I would expect rates to hold at these levels.  Looking ahead, there are a few events that will command attention.

On August 30th Fed Chairman Ben Bernanke will deliver remarks to the annual meeting of central bankers in Jackson Hole, Wyoming.  Then the Fed’s next monetary policy meeting will be held September 12-13th.  US interest rates have risen over the past 2 weeks on diminishing expectations of a third round of quantitative easing (QE3).  Should the Fed hint that  QE3 is still on the table it could cause rates to improve.  However, should the Fed confirm current expectations it could cause rates to rise further.

Current Outlook: neutral