Mortgage rates mostly unchanged throughout February

Remember the “good times” (said sarcastically) over the summer when uncertainty over both the European debt situation and the U.S. economy caused mortgage rates to drop? We had a jolt of nostalgia (more sarcasm) today after Italian election results caused the Dow to drop over 200 points in the afternoon. Mortgage rates also trended lower as a result.

In the election, four parties are deadlocked for control of the upper chamber of the Italian Senate, which could cause “paralysis” in the government and “reignite” the euro-zone debt crisis if this Reuters article is to be believed.

Uncertainty on the market causes volatility in markets, and all of the stress influences investors to look for safer places to put their money. One such place is in U.S. Treasury bonds, and higher demand for Treasuries puts downward pressure on mortgage rates. We saw this process today, at least on the micro level. According to Zillow, the national average of the 30-year fixed rate peaked at 3.53% in the morning, and fell all the way to 3.40% by the time markets closed.

While this kind of news does help with lower rates, the movement is temporary unless it is part of a larger economic or social shift. Will long-term Italian “unrest” cause the Euro-zone to crumble – the type of occurrence to swing mortgage rates lower? We doubt it. There would have to be a whole bunch more “unravelling” before we know anything for sure.

As of late, mortgage rates have relatively unchanged, and there was little movement from our check-in last week.  The 30-year fixed is at 3.250 percent (3.382 percent APR) and the 15-year fixed is at 2.500 percent (2.667 percent APR). To see the complete 10-program CCL rate tracker, see HERE.

The month of February has been characterized by small jumps and declines without any real momentum one way or the other. This will be a big week for economic data, with housing, employment, and GDP data all scheduled to be released. In the next several weeks, we will also have the February employment report and more Federal Reserve stimulus speculation to round out the news cycle.

Perhaps most importantly, the March 1 “sequester” deadline arrives Friday, when elected officials will attempt to find enough spending cuts to avoid across the board reductions. Markets will likely move on this process as well.  Check in with throughout the week for the top breaking news. To inquire about a free loan prequalification, give us a call at 805.543.LOAN.