Mortgage rates remained at the lowest levels of the year, benefiting from weak US economic data and debt troubles in Greece and other European countries. With no resolution to the Greek debt crisis last week, the “flight to safety” trade was in play, leading US bond yields (and mortgage rates) lower. European officials are holding off on approving the next installment of the original Greek bailout package until Prime Minister Papandreou passes a $39.5 billion package of steep tax hikes and budget cuts. A little closer to home, the inflation reports last week confirmed the Fed’s belief that inflation is not a threat at this time and is expected to remain a nonevent for some time given the economic growth slowdown. The Producer Price Index was up 0.2% in May while the Consumer Price Index was also up only 0.2%. But while inflation remains in check, all eyes are focused on jobs and housing. Unemployment benefit applications fell to 414,000 for the week ended June 17, the second drop in three weeks. Still, applications have been above 400,000 for ten straight weeks, evidence the job market is weak compared to earlier this year. The Unemployment Rate in California fell in May to 11.7%, but the number of job applicants are down and the number of available jobs also declined. Not surprisingly, Homebuilder Confidence fell due to continued weakness in home prices, rising material costs, and a large “shadow inventory” of distressed properties.
Currently, the 30 Year Fixed is 4.125% (4.344% APR) and the 15 Year Fixed is 3.375% (3.666% APR). This week is full of potential market-moving economic data, including Existing Home Sales, S&P Case-Shiller Home Price Index, Jobless Claims, New Home Sales, GDP and Durable Goods. And of course, everyone will be watching the Federal Open Market Committee meeting on Wednesday where no change to current policy is expected.