Mortgage Rates Drop on European Concerns Roger Odoardi Increased concerns about Europe caused a flight to safety this week, which helped mortgage rates improve. The Fed statement, which contained no major surprises, and the economic data released during the week had little impact on mortgage rates. As a result, mortgage rates ended the week lower. The optimism from the European bailout plan that was announced last week faded a little this week. Tuesday, the Greek Prime Minister surprised investors by announcing that the proposed bailout package would be put to a public referendum. If Greek voters were to reject the plan, it could cause the problems to spread, particularly to Italy and Spain. Other Greek officials are opposed to holding a referendum, and it’s not certain that one will ever take place. Adding to the uncertainty, the Prime Minister faces a confidence vote to see if he will remain in power. In any case, investors are concerned whether the austerity measures required by the bailout plan will be accepted in Greece. Not long ago, investors were concerned that the US economy was close to a “double dip” recession. Recent economic data and comments from Fed officials have eased those fears, though. Wednesday’s Fed statement expressed a little more optimism about the economy than in the last statement. Friday’s stronger than expected Employment data also suggested that the economy is gradually improving. Against a consensus forecast of 90K, the economy added 80K jobs in October, but the figures from prior months were revised higher by 102K. The Unemployment Rate unexpectedly declined to 9.0% from 9.1% in September. Also Notable: • Weekly Jobless Claims dropped below the 400K level • The Chicago PMI manufacturing index fell to the lowest level since May • The European Central Bank (ECB) surprised investors with a 25 basis point rate cut • The Treasury will auction $72 billion in 3-yr, 10-yr, and 30-yr securities next week Average 30 yr fixed rate: Last week: +0.05% This week: -0.10% Stocks (weekly): Dow: 11,900 -300 NASDAQ: 2,675 -75 Week Ahead Investors will be focused on the G20 meeting this weekend and on events in troubled European countries. The Economic Calendar will be very light next week. Import Prices and the Trade Balance will be released on Thursday. Consumer Sentiment is scheduled for Friday. There will be Treasury auctions on Tuesday, Wednesday, and Thursday. Bond markets will be closed on Friday in observance of Veterans Day. To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com To learn more about the newsletter, please call 800-627-1077 All material Copyright © Ress No. 1, LTD and may not be reproduced without permission. Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.
