Mortgage rates are priced slightly worse this morning.
As expected EU leaders finally got around to agreeing on an aid package for Greece. The financial aid package totals $145 billion and is designed to stave off fears from spreading to other vulnerable countries such as Portugal, Spain, and Ireland.
For now, the passage of this plan will reduce some of the perceived risk for investing in Greek debt. As a result, we expect some unwinding of the “flight-to-quality” trade which helped pressure US mortgage rates lower over the previous couple weeks.
Also pressuring rates higher this morning is positive economic data. The Commerce Department reported this morning that consumer spending rose twice as fast as analysts had been expecting in March. Meanwhile, inflationary pressures remain weak. The same report showed that year-over-year prices only increased by 1.3%.
If it wasn’t for soft inflationary pressure mortgage rates are likely to be higher this morning. I continue to recommend a locking bias.
Current outlook: locking bias