Early in the week, Greece reached a deal with European Union leaders to secure additional financial aid. By Friday, however, the deal was in doubt, as the EU leaders declared that the Greek Parliament would have pass new austerity measures before the aid would be released.
Austerity measures have been unpopular in Greece, giving rise to riots among citizens and resignations among politicians. Markets responded to the potential undoing of the debt deal by seeking safety in bonds -- including U.S. mortgage-backed bonds.
The Greek debt default story has helped fuel low mortgage rates in Georgia. Once a final deal is reached, mortgage rates are likely to rise.
For now, though, mortgage rates remain at all-time lows.
According to Freddie Mac's weekly mortgage rate survey, the average, conforming 30-year fixed mortgage rate held firm at 3.87% last week for mortgage borrowers willing to pay an accompanying 0.8 discount points plus applicable closing costs. 1 discount point is equal to one percent of your loan size.
For borrowers unwilling to pay discount points and/or closing costs, average mortgage rates are higher.
This week, data returns to the U.S. economic calendar.
Greece will still be in play, but the health of the U.S. economy will determine in which direction mortgage rates will go. There are two inflation reports due -- the Consumer Price Index and the Producer Price Index.
The former is a "cost of living" indicator for U.S. households; the latter measures the same for business. Inflation is bad for mortgage rates so if either report comes in unexpectedly high, mortgage rates are likely to rise.
The same is true for Tuesday's Retail Sales report.
Retail Sales account for close to 70% of total U.S. economic activity. An unexpectedly strong Retail Sales figure will suggest that the domestic economy is improving and that, too, would pressure mortgage rates up.
If you're shopping for a mortgage, or floating one with your lender, consider locking in this week. Mortgage rates don't have much room to fall and there's much room to rise.
