Mortgage Rates  are little changed to start the week.  There has been and will continue to be extremely limited amounts of domestic Economic data this week.  In general, markets have been paying lots of attention to the borderline-crisis situation in Europe, but that is doubly true this week as an important EU Summit will take place on Friday.  Many are hoping that this will result in increased firepower for the ECB (European Central Bank). 

There's some level of consensus that direct capital injection by the ECB is needed to stem the EU debt crisis.  Treasury yields and Mortgage Rates are currently experiencing their historically low levels in large part, due to fear surrounding potential fallout from the EU debt crisis.  If the ECB signals it will get more directly involved with markets, conventional wisdom would suggest this would apply upward pressure on rates.  This is not, however, a sure thing. 

The previous EU Summit of similar magnitude did more to move markets in the weeks leading up to the summit itself whereas the weeks that followed were simply a process of returning markets to previous levels.  There's no way to know how things will go this time around.  What we do know is that at an average of 4.0%, Best-Execution rates are near historical lows and it's a risky proposition to bet on more than .125-.250 of upside in the short term.


  • 30YR FIXED -  4.0%, increasing amount of 3.875's.
  • FHA/VA - 3.75%, fewer 3.875's
  • 15 YEAR FIXED -  3.375%-3.5%
  • 5 YEAR ARMS -  low 3% range, huge variations from lender to lender.


In a fundamental sense, we're well aware of the fact that European drama continues to help domestic bond markets.  Technically, we're impressed that mortgage rates have been this flat for this long.  With the ongoing sideways movement of Best-Execution around 4%, the chances increase that the next move will carry a bit of momentum with it (as if the current calm is akin to "storing energy").  If it goes in a mortgage rate-friendly direction, there's limited benefit (an eighth to a quarter of a point of improvement) versus the damage that could result from it going the other way.  Fortunately, neither of those eventualities appear to be happening at the moment, so it's hard to go wrong.  We'll let you know the day that changes.