The big news “Was”…that the European leaders had reached agreement to provide debt aid to European countries representing the greatest “Risk” to the region. Investors reversed their flight to “Safety Trade”, pushing mortgage rates higher. The domestic economic news published last week was good for mortgage rates. Part of that news was that the Fed indicated that it might purchase additional Mortgage Backed Securities, (MBS), in hopes of stimulating the economy.
The net effect of these opposing forces resulted in significant volatility in the mortgage market, with rates ending up only slightly higher by week’s end.
“Fast Forward” to today, and know that European markets took a nose dive today on fears that this great European rescue plan might well unravel given Greek Prime Minister George Papandreou’s unexpected announcement of his intent to call for a referendum on his country’s latest rescue package proposal. The concern relates to the uncertain prospect of an affirmative outcome on such a vote. Lack of an affirmative outcome would result in chaos in not only Greece, but in the entire Euro based model.
There is a Fed meeting on Wednesday. Investors will be looking for an update on economic growth and signs of additional easing. Employment data is out on Friday. This particular report has the potential to impact the markets in a significant manner, (therefore mortgage rates as well).
Rates are likely to remain quite low, so now is a great time to give us a call!