Conventional mortgage rates dropped last week, ARMs falling more than fixed. FHA mortgage rates also improved.
Global concern for the Greece Situation are so strong that markets even shrugged off April's blowout job report. On most other days, mortgage rates would soar on better-than-expected jobs data -- especially coming out of a recession.
The Department of Labor's April Non-Farm Payrolls reports:
- Payrolls have been net positive for 4 straight months
- Nearly 600,000 jobs have been created thus far in 2010
- Monthly job growth posted its biggest gain in 4 years in April
Additionally, more than 800,000 Americans re-entered the workforce in April in search of work. As a result, the Unemployment Rate jumped by 0.2 percent -- another positive sign (in a roundabout way).
But again, Wall Street wasn't watching jobs -- Wall Street was watching Greece. And Greece was in riot.
This week, without much new data due on the economy, mortgage markets should continue to take cues from Greece, the IMF and the Eurozone. If a bailout agreement can be reached that investors feel is effective, the safe haven buying that's led rates lower will recede and mortgage rates should rise.
Conversely, if an agreement is reached that investors deem ineffective, or no agreement is reached at all, mortgage rates should drop.
Each week for the last four weeks, we've talked about Greece and its pending bailout and how it might impact rates because each week the bailout appears imminent. Even this week, the market opens with the news that the IMF has approved a $40 billion lifeline to Greece. Maybe this will be the news that finally turns the mortgage market around.
Mortgage rates are unnaturally low right now and should change direction quickly. The problem is nobody knows when that will happen so be careful when rate shopping and keep an eye on the market.
Mortgage rates may fall further, but when they turn higher, they're going to turn quickly.
