Good News for Economy is Bad News for Mortgage Rates

Greek Debt Situation Nearing Resolution

Mortgage markets worsened last week as the Greek sovereign debt situation came closer to final resolution, and as the U.S. housing market showed signs of life.

After many weeks, European leaders agreed on a financial package for Greece that featured favorable loan terms designed to slow Eurozone contagion, along with a built-in, 37 billion euro “haircut” for private-sector investors.

The accord pleased Wall Street. Equities rallied after the announcement. Mortgage bonds sank.

Bonds also sank after a strong home builder confidence report Monday.

Last week, conforming and FHA fixed mortgage rates increased in Iowa and for the first time in 3 weeks. Adjustable-rate mortgages slipped slightly.

The interest rate spread between the Freddie Mac 30-year fixed rate and 5-year ARM is back near its all-time high.

Specifically, What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week. Here’s the what actually happened with those reports last week:

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates. There are normally two major things that impact the direction:

Economic News. (Like the calendar above).
International News. (major events, pending legislation, war related news, etc).
Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder – mortgage rates are only based on one thing, Mortgage Backed Securities (MBS). The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote. Each scenario is different (there are 27 different factors a mortgage rate is determined by). If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation. That’s my policy. If you like what you hear, my team and I would love to help you out with your mortgage! Our contact information is on the top right hand side of this page!