Mortgage rates in California improved early last week as a result of worries about Eurozone sovereign debt default and the U.S. employment report showed the economy’s rebound to be moving slower than originally anticipated.
In Greece, the nation readied itself for its second bailout in two years. The bailout measures from last year have not worked as planned. There are concerns that a default would start a domino effect and deliver the Euro region into an economic tailspin.
These fears spurred a flight-to-quality in bond circles to the benefit of U.S. mortgage rate shoppers. Ironic that quality bonds are now U.S. backed mortgage bonds.
In addition, last week’s U.S. jobs data fell short of expectations, giving another boost to mortgage markets.
There were 3 weak reports:
- ADP showed 38,000 private-sector jobs created in May. Analysts expected 170,000.
- The Department of Labor showed 422,000 Initial Jobless Claims. Analysts expected 415,000.
- The Bureau of Labor Statistics showed 54,000 jobs created in May. Analysts expected 150,000.
Each of these data points underscores the fragile nature of the U.S. recovery, and the weaker-than-expected readings helped mortgage rates improve.
It’s the sixth week of 7 that mortgage rates in California’s Inland Empire Corona have improved, setting the stage for possible new refinances, but mainly increasing home affordability.
This week, there is very little new data on which for mortgage bonds to trade. Therefore, expect the stories from recent weeks to continue to dominate headlines. If Greece’s bailout plan is met with investor optimism, mortgage rates should rise. If the plan falls flat, mortgage rates could fall.
There will also be chatter about the U.S. debt ceiling, another potentially negative force on mortgage rates.
If you’re floating a mortgage rate right now, consider locking in. There’s a lot more room for rates to rise than to fall.