Mortgage rates are unchanged from last week.
As European leaders prepare to gather at the tail end of this week for a summit on the European debt crisis mortgage rates here in the US continue to hover at all-time low levels. The financial markets are pessimistic that anything meaningful will come out of the summit. After all, there have been countless summits before and Europe still finds itself on a “cliff”.
At this point any credible solution would involve Germany in effect “co-signing” for the debts of other EU members and to date they have been very reluctant to take that step. Until Germany believes that the cost of not “co-signing” exceeds the cost of doing so mortgage rates should remain near all-time lows.
In addition to monitoring the EU summit at the end of the week the financial markets will digest plenty of new economic data released throughout the week. The Commerce Department lead off the busy week with a healthy report on new home sales. The monthly report showed that the number of new homes sales in May grew by 20% from May of 2011.
Lastly, the US Treasury is set to auction $99 billion in new debt this week. The issuance of new 2-year-, 5-year, and 7-year notes is expected to be met with strong demand.
At this point the market has priced in favorable interest rate assumptions. I don’t think it’s a bad idea to lock in even though I don’t see any imminent reason why rates would move higher.
Current Outlook: neutral