Europe's Crisis Good for U.S. Mortgage Rates?
U.S. treasuries rallied this week over the uncertainties in the financial soundness of Spain, Portugal, Italy and Greece. Investors looking for safe investments pushed the U.S. treasuries up, which in turn lowered their yields. The yield on the 10-year note closely correlated to mortgage rates closed at 3.16% yesterday, down from 3.5% in mid May. Mortgage rates reacted to this yield drop to create refinance opportunities. Today’s 30-year fixed rate reached 4.75%, down from 5.25% two weeks ago, and remain at historically low levels.
With the situation in Europe showing no signs of improvement, and a growing conflict between South and North Korea threatening stability in South Asia, it seems logical that mortgage rates will drop even further as the inventors continue to move to U.S. bonds . But, with U.S. unemployment still at 10% and worries that European debt obligations will affect the U.S. economy, we’re likely to see continued mortgage rate volatility. Consumers looking to take advantage of this should refinance today, as mortgage rates may never be this low again.