Bay Area Mortgage Rate Predictions For: June 6, 2011

Bay Area Mortgage Rate Predictions For: June 6, 2011

Non-Farm Payrolls June 2009 - May 2011Mortgage markets improved last week, carried by the same stories that have led markets better since April. Worries of a Eurozone sovereign debt default mounted, and the U.S. economy’s revival showed itself to be slower than originally anticipated causing interest rates across California to slide.

Interest Rates are Geo-Driven

In Greece, the nation readied itself for its second bailout in two years. The austerity measures of last year have not worked as planned. There are concerns that a default would lead to contagion, delivering the Euro region into an economic tailspin.

These fears spurred a flight-to-quality in bond circles to the benefit of U.S. mortgage rate shoppers. Remember I always try to drive home: 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.

In addition, last week’s U.S. jobs data fell short of expectations, giving another boost to mortgage markets.

There were 3 weak reports:

  1. ADP showed 38,000 private-sector jobs created in May. Analysts expected 170,000.
  2. The Department of Labor showed 422,000 Initial Jobless Claims. Analysts expected 415,000.
  3. The Bureau of Labor Statistics showed 54,000 jobs created in May. Analysts expected 150,000.

Each of these data points underscores the fragile nature of the U.S. recovery, and the weaker-than-expected readings helped mortgage rates improve.

It’s the sixth week of 7 that mortgage rates in Pleasanton, Dublin Ca and Livermore have improved, setting the stage for a new wave of refinances.

The Week Ahead for Bay Area Interest Rates

This week, there is very little new data on which for mortgage bonds to trade. Therefore, expect the stories from recent weeks to continue to dominate headlines and mortgage rates across the Bay Area to remain steady. If Greece’s austerity and/or bailout plan is met with investor optimism, mortgage rates should rise. If the plan falls flat, mortgage rates should fall.

There will also be chatter about the U.S. debt ceiling, another potentially negative force on mortgage rates.

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 this week 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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