Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Building Strong, Lasting Relationships; One Client at a Time. The Europe debt crisis is back with a major sell-off in US and global equity markets, and a move into US treasuries pushing the bellwether 10 yr note and mortgage rates to new historical lows. This week Greece’s troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund will descend on Greece to review the debt crisis I the country. There is now concern that Greece will fall into depression similar to the US depression in the 30s, and an increasing concerns Greece will exit the EU. It shouldn’t be a shock to markets, there is little chance Greece can survive in the EU, nevertheless after a couple of weeks with not much out of the region it is now back with renewed fears. The reaction is sending US interest rates to record lows and the stock market down hard this morning. After euro finance ministers failed to staunch a decline in the single currency with the approval of a 100 billion-euro ($122 billion) aid package for Spanish banks last week, the 3 governing bodies will seek to determine the fiscal state of Greece where the crisis began almost three years ago. The euro currency is crumbling setting new lows against the dollar and the Japanese yen. The euro slipped below its lifetime average against the U.S. dollar art $1.2080. The market consensus now is that Greece will not be able to meet the requirements set out when it got bail-out money. Germany over the weekend said it will not agree to reworking the Greek bailout plan. “If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told the media yesterday, adding that he is “very skeptical” Greece can be rescued and that the prospect of its exit from the monetary union “has long ago lost its terror.” The repercussions over Greece has sent Spain’s 10 yr note to a record 7.48% this morning up about 30 basis points in the last couple of days. Italy’s cost of borrowing also increasing to levels that will add more problems for it getting more money to fend off another crisis. Spain is next up for the rolling crisis. At 9:30 the DJIA opened -179, NASDAQ -63, S&P -20. The 10 yr note at 9:30 at 1.42% -4 bp and mortgage prices up 6/32 (.18 bp). The renewed concerns over the debt crises in Europe will support the bond and mortgage markets this week. However, although this morning the fear factor and concerns are at high levels, we have experienced this many times in the last couple of years. Markets will react on any comments out of the region. While Greece in the wider perspective is finished in the EU, momentary comments from the IMF, the ECB or the EU that sound more optimistic will get traders’ attention with market swings that could be severe similar to what we are seeing this morning. That said, technically the bond and mortgage markets are increasing their bullish bias. Expect the possibility of volatile markets this week.