Mortgage markets improved last week as optimism for a Greek Bailout program faded, triggering a global flight-to-quality assets. Fear of a Eurozone rift outweighed positive economic remarks from the Federal Open Market Committee and an in-line U.S. jobs report.
Although the Federal Reserve said the economy had “strengthened somewhat“, a statement backed up by Friday’s Non-Farm Payrolls data which — with revisions — met analyst expectations, concern that Greece may not receive its aid caused mortgage to fall.
Conforming mortgage rates dropped throughout Michigan Monday and Tuesday, pushing rates to near their lowest levels of the year. Rates remained low through Friday.
According to Freddie Mac’s weekly mortgage market survey, the average 30-year fixed rate mortgage is 4.00% nationwide, plus closing costs and an accompanying 0.7 discount points.
A “discount point” is a one-time loan fee paid at closing, where 1 discount point is equal to 1 percent of your loan size.
As an example, 1 discount point on a $300,000 home loan costs $3,000.
This week, with no new economic due for release, the fate of mortgage rates in Lansing again depends on what develops in Europe. If Greece cannot reach accord within its own parliament, and cannot enact the austerity measures as dictated by its aid package, mortgage rates should fall this week, too.
However, if Greece can reach agreement and move forward, it will appease investors worldwide and U.S. mortgage rates should resume rising. Likely by a lot.
Remember : The U.S. economy has shown slow, steady improvement of late and, normally, this would result in higher mortgage rates for consumers. That’s not what we’ve experienced, however. Instead, fears of a Greek debt default have dominated headlines.
As soon as markets are certain that Greece has a way forward, attention will return to the U.S. economy, and mortgage rates are expected to rise.
Therefore, float your mortgage rate with caution this week. Depending on global events, mortgage rates may rise or fall. Eliminate your interest rate risk. Lock your rate today.
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