|Europe continued to dominate this week as concerns continue over how many bad European loans (be they government or private) are really out there. (This is very similar to the concerns over US banks a year ago.) This week investors ran away from Europe and to the US bond market, of which mortgages are a part, as they tried to get away from the uncertainty over the European situation. Then China announced that they would continue to buy European bonds and investors ran back to Europe, selling their US positions, and rates went up. Remember, as global money invests in the US bond market (which includes mortgages) rates drift down because the bond makers don’t have to give as much of a return to entice the investors to buy. When money flows out of bonds, rates have to go up to entice investors NOT to sell and go elsewhere.
Under the European shadow we did have some good economic news:
All in all, not a bad week as we slowly work our way out of this ‘Great Recession’.
One other announcement made this week was by the State Bond Authority. They have reduced the rate to 5.25% with 3.5% Down Payment Assistance. WOW!!
This week rates ranged between 4.625% to 4.875% depending on program, credit and points.
Sr. Loan Consultant