Euro bailout uncertainty leads to uncertain bank mortgage rates

Sandy Smith's picture

While European finance ministers work feverishly to structure a deal that will shore up the euro and avoid a Greek default, nervous investors remain uncertain about the likely outcome, a mood reflected in the gyrations of banks and their mortgage interest rates.

News reports this morning tell of proposals to have banks and bondholders accept larger losses on their Greek bond holdings as part of a bailout deal. While this would avert a default, it would nonetheless have a negative impact on bank balance sheets - and bank stocks by extension. However, if the usual relationship between stocks and bonds holds in such an event, it would ultimately be good for home buyers and homeowners, as money would likely continue to flow into U.S. government bonds and counter any upward pressure on interest rates.

Mortgage rate movements diverge on overnight surveys

That pressure is slight at best now anyway, if the weekend movements in the overnight surveys are any guide. Changes in mortgage interest rates were modest in both directions - largely upward on the National Mortgage Marketplace and largely downward on the national overnight survey.

Yesterday's average afternoon mortgage rates on the National Mortgage Marketplace, with changes from Thursday and one week ago, are: 30-year fixed, 3.97% (+2 points, +2 points); 15-year fixed, 3.35% (+5 points, +5 points); 5-year ARM, 2.84% (+4 points, unchanged). Today's real-time rates as of 10 a.m., with changes from Friday morning and yesterday afternoon, are: 30-year fixed, 3.99% (+4 points, +2 points); 15-year fixed, 3.33% (+5 points, -2 points); 5-year ARM, 2.81% (+6 points, -3 points).

This morning's average mortgage rates on the overnight survey, with changes from Friday and one week ago, are: 30-year fixed, 4.17% (-1 point, -2 points); 15-year fixed, 3.45% (-2 points, -4 points); 5-year ARM, 3.01% (-2 points, -6 points).

One basis point equals one hundredth of a percentage point. Rates reported in this article assume good credit (FICO score of 650 or higher) and a 20% down payment. Morning rates from are for loans for the most creditworthy borrowers (FICO score of 720 or higher).

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