Mortgage rates are priced slightly worse this morning.
The “flight-to-safety” trade, which has helped mortgage rates achieve 7-month lows, is reversing a little this morning as the markets anticipate what’s next for Greece’s ongoing debt saga.
Later this afternoon Greece’s Parliament will cast a vote of confidence (or no-confidence) for the Prime Minister George Papandreou. The vote is seen as a preliminary step for his government to pass further austerity measures which Greece’s creditors require as a contingency for additional bailout funds.
Without the vote of confidence Greece’s fiscal condition will likely deteriorate further which would help rates here in the US move lower. However, analysts widely expect that the Prime Minister will receive a vote of confidence which could have the opposite effect.
At least for now it looks like rates may get pushed slightly higher. However, the longer-term trend remains in tact and there will certainly be more uncertainty when Greece’s Parliament has to vote on additional austerity cuts.
Don’t forget, tomorrow brings the Fed’s monetary policy statement and press conference where we’ll be listening for clues regarding the Fed’s next moves.
Current Outlook: near-term locking bias, longer-term neutral