Mortgage rates moved modestly lower on Tuesday, amid fears of a Greek exit from the Eurozone. Since the release of a weaker-than-expected June Non-Farm Payrolls data last Thursday, U.S. mortgage rates have been improving gradually, however, the disappointing June NFP report is only partly responsible for the downtick in interest rates. As we mentioned before, these days market movements are mainly driven by the headlines on the Greek debt crisis, which appears to be overshadowing the impact of domestic economic data. Due to the financial turmoil in Greece, which impacts the global economy as well, many investors have dialed back on riskier assets and moved cash into ultra-safe haven assets, such as treasury bonds. Today was another positive day for the U.S. bond market, as yields on treasuries, which are considered the safest fixed-income securities, shifted slightly lower, while pricing on bonds increased.
The yield on the benchmark 10-year treasury note declined to 2.27% at the close of Tuesday’s trading session, a 3 basis points slide compared to data from a day earlier. As mortgage rates tend to follow 10-year treasury bond moves, chances that you will see slightly lower mortgage interest rates and/or borrowing costs today at your lender. With regards to the long-term 30-year treasury note, the yield on this type of bond slipped to 3.04% on Tuesday, which translates to a 4 basis points improvement compared to Monday’s data.
Coming back to Greece, it looks like the financial crisis is deepening in the troubled country, after Eurozone leaders gave an ultimatum to the Greek government on Tuesday, to table viable economic proposals and agree on fresh bailout terms with its creditors by Sunday, or face bankruptcy and a possible exit from the Eurozone. This is considered a final deadline given to Greece, after the country failed to come up with substantive new proposals to settle its debt crisis and save its collapsing economy from disaster during Tuesday’s meeting with European leaders in Brussels.
Although, there was not much on Tuesday’s domestic economic calendar, we have got some fresh data on international trade and a new report on job openings. According to numbers released by the Commerce Department on Tuesday, the U.S. trade deficit widened to $41.9 billion in May due to a slowdown in exports. The trade gap increased by $1.2 billion in May from $40.7 billion in April.
The Job Openings and Labor Turnover Survey for May, or JOLTS for short, was released by the Labor Department on Tuesday. According to the latest labor market figures, job openings surged nationwide in May to a record-high, totalling 5.36 million vacancies, which is right in line with economists’ expectations. This marks the highest number of job openings since the start of the JOLTS report in 2001. This is an encouraging report, indicating that the labor market is gaining momentum.
While market volatility has been favoring lower mortgage rates in the last few days, if you are considering getting a mortgage, it’s still very risky to float in such a volatile environment. So if you have been hesitating to lock a mortgage rate since the beginning of the week, today brings another good opportunity to take action and lock in today’s gains. As we have said it numerous times before, U.S. mortgage rates are the beneficiary of the financial turmoil in Greece in the short-term, but if the debt crisis eventually gets resolved, expect mortgage rates to rise. And with the Federal Reserve planning to lift short-term interest rates this year for the first time in nearly a decade, we anticipate the arrival of higher mortgage rates by the end of 2015.
In other news, 30-year mortgage rates are currently on a downward trajectory at the Zillow Marketplace, according to the financial firm’s latest data. The 30-year fixed rate mortgage ended the Wednesday-to-Tuesday wraparound week at 3.88%, a decrease of 5 basis points compared to data from the prior week. Zillow also reported lower mortgage rates across the board, with the 15-year fixed mortgage finishing the wraparound week at 3.00%, while the 5/1 ARM coming out at 2.88%.
Looking at current mortgage rates by state, in California, the average rate on the 30-year fixed rate mortgage is currenty hovering at 3.90%, an improvement of 4 basis points compared to data from a week earlier. The Zillow Mortgage Rate Ticker also showed, that the biggest weekly drop in 30-year mortgage rates took place in New Jersey and Pennsylvania. In New Jersey, the interest rate on the 30-year FRM dipped to 3.86% from 3.93% that it held a week earlier, while in Pennsylvania, the same type of conventional mortgage loan headed lower to 3.87% , a 7 basis points slide since last week.
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