Saturday, June 27, 2015 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
Mortgage rates are at an all-time high for 2015. Is this weekend going to offer up a deal? Markets think it might but that is a giant leap of faith based on what we have seen for the last four months. Yesterday the creditors came up with a five month plan to give Greece time and more money to get their economic house in order. Today though the finance ministers sounding not only skeptical but annoyed. A significant bloc of euro-zone ministers say the compromise prepared by the institutions representing them in last-ditch bailout talks with Greece gives too much away to Greece. On the other side, Greece wants more. Most economists and I believe there will be no agreement this weekend, the best that can be seen is some kind of temp deal pushing the deadline down the calendar.
This week the 10yr note yield increased 22BPS to 2.48%, and the 30yr MBS conventional price down 123BPS. Next week it is still Greece, no matter what occurs over this weekend. Markets remain bearish. Right now everyone is watching US stock indexes, looking increasingly weak and about to experience a sizeable sell-off (correction if that sounds better). Way overdue now and China may be leading the way down. Chinese stock markets declining the last two weeks, with the main index tumbling on concerns the government is seeking to cool a yearlong debt-fueled rally.
Monday should be quite volatile if the EU ministers have anything to say about it. Should know on Sunday for those that can access the news from Brussels. NO firm agreement is expected. US interest rate markets are not leading, but following the movement of interest rates in Europe.
In summary, the bottom line is that rates are not as low as they were yesterday. Rates are not as low as they were earlier this week. The bigger question always is - are they going higher? Definitely maybe! If you have been following along for any length of time, you know I have been in heavy 'defense' mode since early May, and even as early as late April. Nothing about that has changed. There continues to be more risk than reward when it comes to holding off on locking, and next week brings tremendously increased volatility. In fact, much of today's weakness was a defensive preparation on the part of financial markets for that potential volatility.
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