What’s Ahead For Dublin CA Mortgage Rates This Week : July 25, 2011

What’s Ahead For Dublin CA Mortgage Rates This Week : July 25, 2011

Congress debates the debt ceilingMortgage markets worsened across the Bay Area last week as the Greek sovereign debt situation came closer to final resolution, and as the U.S. housing market showed signs of life.

Geo Political News and Interest Rates

After many weeks, European leaders agreed on a financial package for Greece that featured favorable loan terms designed to slow Eurozone contagion, along with a built-in, 37 billion euro “haircut” for private-sector investors.

The accord pleased Wall Street. Equities rallied after the announcement. Mortgage bonds sank. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

Bonds also sank after a strong home builder confidence report Monday.

Last week, conforming and FHA fixed mortgage rates increased in Dublin and across California and for the first time in 3 weeks. Adjustable-rate mortgages slipped slightly.

The interest rate spread between the Freddie Mac 30-year fixed rate and 5-year ARM is back near its all-time high.

This Week in Mortgage Rates

Loan Squawk

This week, mortgage rates will be guided by Congress’s on-going U.S. debt ceiling debate. The United States government is expected reach its legal $14.294 trillion debt limit August 2, 2011. Congress must either vote to raise the debt ceiling, or take steps to reduce debt prior to August 2.

The debt ceiling was last raised February 12, 2010.

It’s unclear in which direction Congress will vote. Therefore, mortgage rates may be erratic until a deal is reached. If the debt limit is raised, expect mortgage rates to rise. This is because carrying high levels of debt can devalue the U.S. dollar and mortgage bonds are less valuable as the dollar weakens.

On the other hand, if Congress votes to make cuts in the budget, mortgage rates should fall. This is because fewer treasury securities will be issued, creating fewer inflationary pressures on the U.S. economy. Inflation is linked to higher mortgage rates.

Also this week : New Home Sales (Tuesday), Pending Home Sales (Thursday), Consumer Sentiment (Friday), plus Treasury auctions of 2-year, 5-year and 7-year notes. Each event can move mortgage rates so be ready to lock at a moment’s notice.

Mortgage rates remain low. By August 2, they could be much higher.

Have a Plan for your Mortgage

If you’re floating a mortgage rate right now, consider locking in. Interest Rates are low. The risks of rates jumping at any given point on news about the debt ceiling are always there. I love to work with readers that find my information on the Mortgage and Housing Market helpful in your decision making process. As a Mortgage Planner at Vintage Mortgage Group in Pleasanton I am in a unique position to help you capitalize at any point in the market. Contact me below today to help you with your purchase or refinance.

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