Increased concerns about European debt issues and the pace of global economic growth caused investors to shift to relatively safer assets last week. As a result, mortgage rates declined a little to near the lowest levels of the year.
Investors hoping for the European Central Bank (ECB) to expand its role in providing aid to euro zone countries were again disappointed. The ECB clearly indicated that it currently has no plans to introduce any major new aid programs. It appears that ECB officials believe that the appropriate next step in easing the debt issues is for tighter budgetary discipline. Along those lines, European Union officials suggested that working out the details of an agreement on fiscal integration between the many EU countries may take months. Investors responded to the lack of significant progress by selling many European stocks and bonds and purchasing relatively safer assets such as US government guaranteed Treasuries and mortgage-backed securities (MBS).
Last Tuesday’s Fed statement also disappointed any investors looking for a shift in policy. It contained no major changes from the last statement. According to the Fed, the economy has been “expanding moderately”, which is a small upgrade from the prior statement. The Fed gave no indication of providing additional stimulus or changing its communications policies.
This week, Housing Starts were released on Tuesday. Existing Home Sales will come out on Wednesday, (today). The final revisions to third quarter GDP and Consumer Sentiment will be released on Thursday. Friday will be the biggest day with Durable Orders, Core PCE inflation, Personal Income, and New Home Sales. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday. Mortgage markets will close early on Friday ahead of the Christmas holiday. Also note that trading volume is generally very light during the final two weeks of the year, which means that mortgage rates may be more volatile than usual.
Call Pete, Cody, Debbie or Patrick at “Oklahoma Mortgage Lenders” today for a current rate quote!